Test Bank for Managerial Accounting: The Cornerstone of Business Decision Making
8e Mowen
Chap 01_8e_Mowen
Indicate whether the statement is true or false.
1. A cost accountant would normally occupy a staff position within an organization.
a. True
b. False
2. The four emphasized areas of the CMA examination reflect the needs of managerial accounting and highlight
that managerial accounting has more of an interdisciplinary flavor than other areas of accounting.
a. True
b. False
3. Management accounting information is used only by manufacturing organizations.
a. True
PR
b. False
4. Positions that have direct responsibility for the basic objectives of an organization are referred to as line positions.
a. True
b. False
O
5. Virtually all managerial accounting practices were developed to assist managers in maximizing profits.
a. True
b. False
FD
6. Managerial accounting is designed primarily for internal users.
a. True
b. False
7. Managerial accounting information is not important for not-for-profit organizations.
O
a. True
b. False
C
8. Time is not a crucial element in all phases of the value chain.
a. True
b. False
9. Activity-based costing is a less detailed approach to determining the cost of goods and services than traditional
cost accounting.
a. True
b. False
10. Amelia compared the budgeted spending on labor and materials used in production to the actual spending on labor
and materials used in production. Labor spending was higher than expected. Amelia emailed Robbie to discuss
this outcome. This is a managerial accounting-oriented issue.
a. True
b. False
Page 1
,Name: Class: Date:
Chap 01_8e_Mowen
11. The purpose of the Certificate in Public Accounting is to provide minimal professional qualification for external
auditors.
a. True
b. False
12. Excellent customer service is an example of a value-added activity.
a. True
b. False
13. GAAP governs financial accounting.
a. True
b. False
PR
14. Managerial accounting emphasizes the future.
a. True
b. False
15. The value chain is the set of activities required to design, develop, produce, market, and deliver products and
services to customers.
O
a. True
b. False
FD
16. The belief that each member of a group bears no responsibility for the well-being of other members is a common
principle underlying all ethical systems.
a. True
b. False
17. The process of choosing among competing alternatives is called decision making.
O
a. True
b. False
C
18. The managerial activity of monitoring a plan's implementation and taking corrective action as needed is referred
to as decision making.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
19. Which of the following would normally hold a line position?
a. Staff accountant
b. Purchasing manager
c. General manager
d. Cost accountant
Page 2
,Name: Class: Date:
Chap 01_8e_Mowen
20. The standards of ethical conduct for managerial accountants include:
a. caring for others, intuition, and respect for others.
b. pursuit of excellence, credibility, and immediacy.
c. confidentiality, confidence, integrity, and observance.
d. competence, confidentiality, integrity, and credibility.
21. Investigating production variances and adjusting the production process are examples of:
a. planning.
b. controlling.
c. decision making.
d. All of these are correct.
22. Which of the following statements is true of total quality management?
PR
a. It is a management philosophy in which manufacturers strive to create an environment that will enable
workers to manufacture zero-defect products.
b. It has replaced the acceptable quality attitudes of the past.
c. It emphasizes the elimination of waste.
d. All of these are correct.
O
23. Activity-based costing:
a. strives to create an environment that will enable workers to manufacture zero-defect products.
FD
b. is the process of choosing among competing alternatives.
c. was established in response to financial scandals.
d. emphasizes the cost of tasks required to produce a product or offer a service.
24. Accountants that have a Certificate in Public Accounting (CPA):
O
a. are the only accountants permitted to serve as external auditors.
b. must pass a national examination and be licensed by the state in which they practice.
c. are responsible for assuring the reliability of a firm's financial statements.
C
d. All of these are correct.
25. Which of the following statements is true of profit maximization?
a. Profit maximization is achieved by considering the financial measures focused only on efficiency.
b. Profit maximization is an objective of financial accounting but not managerial accounting.
c. Profit maximization should be achieved through legal and ethical means.
d. Profit maximization results in maximum cost to and maximum production by a company.
26. The controller of an organization participates in:
a. planning.
b. controlling.
c. decision making.
d. All of these are correct
Page 3
, Name: Class: Date:
Chap 01_8e_Mowen
27. In the United States, individuals who provide assurance service are designated as:
a. Certified Public Accountants.
b. Certified Financial Accountants.
c. Chartered Accountants.
d. Certified Management Accountants.
28. Which of the following members of an organization would normally hold a staff position?
a. Head of security
b. Accounting manager
c. Customer service executive
d. All of these are correct.
29. Which of the following areas is not emphasized by the Certified Management Accountant (CMA) examination?
PR
a. External auditing and internal control
b. Management reporting, analysis, and behavioral issues
c. Decision analysis and information systems
d. Economics, finance, and management
O
30. Which of the following is not an objective of managerial accounting?
a. To produce information for external users, including investors, creditors, customers, suppliers, and
government agencies
FD
b. To provide information for planning an organization’s actions
c. To provide information for evaluating and continuously improving an organization’s actions
d. To provide information for effective decision making by the management of a company
31. Managerial accounting reports are prepared:
O
a. to provide creditors with information useful in making credit decisions.
b. to meet the needs of decision makers within a firm.
c. to present historical information.
C
d. All of these are correct.
32. Which of the following would occupy a line position in a hospital?
a. Cafeteria manager
b. Hospital administrator
c. Chief of surgery
d. None of these are correct.
33. Which of the following statements is true of financial accounting?
a. Financial accounting is directed toward external users.
b. Financial accounting is subject to externally imposed rules.
c. Financial accounting provides information that can be objectively verified and audited.
d. All of these are correct.
Page 4
8e Mowen
Chap 01_8e_Mowen
Indicate whether the statement is true or false.
1. A cost accountant would normally occupy a staff position within an organization.
a. True
b. False
2. The four emphasized areas of the CMA examination reflect the needs of managerial accounting and highlight
that managerial accounting has more of an interdisciplinary flavor than other areas of accounting.
a. True
b. False
3. Management accounting information is used only by manufacturing organizations.
a. True
PR
b. False
4. Positions that have direct responsibility for the basic objectives of an organization are referred to as line positions.
a. True
b. False
O
5. Virtually all managerial accounting practices were developed to assist managers in maximizing profits.
a. True
b. False
FD
6. Managerial accounting is designed primarily for internal users.
a. True
b. False
7. Managerial accounting information is not important for not-for-profit organizations.
O
a. True
b. False
C
8. Time is not a crucial element in all phases of the value chain.
a. True
b. False
9. Activity-based costing is a less detailed approach to determining the cost of goods and services than traditional
cost accounting.
a. True
b. False
10. Amelia compared the budgeted spending on labor and materials used in production to the actual spending on labor
and materials used in production. Labor spending was higher than expected. Amelia emailed Robbie to discuss
this outcome. This is a managerial accounting-oriented issue.
a. True
b. False
Page 1
,Name: Class: Date:
Chap 01_8e_Mowen
11. The purpose of the Certificate in Public Accounting is to provide minimal professional qualification for external
auditors.
a. True
b. False
12. Excellent customer service is an example of a value-added activity.
a. True
b. False
13. GAAP governs financial accounting.
a. True
b. False
PR
14. Managerial accounting emphasizes the future.
a. True
b. False
15. The value chain is the set of activities required to design, develop, produce, market, and deliver products and
services to customers.
O
a. True
b. False
FD
16. The belief that each member of a group bears no responsibility for the well-being of other members is a common
principle underlying all ethical systems.
a. True
b. False
17. The process of choosing among competing alternatives is called decision making.
O
a. True
b. False
C
18. The managerial activity of monitoring a plan's implementation and taking corrective action as needed is referred
to as decision making.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
19. Which of the following would normally hold a line position?
a. Staff accountant
b. Purchasing manager
c. General manager
d. Cost accountant
Page 2
,Name: Class: Date:
Chap 01_8e_Mowen
20. The standards of ethical conduct for managerial accountants include:
a. caring for others, intuition, and respect for others.
b. pursuit of excellence, credibility, and immediacy.
c. confidentiality, confidence, integrity, and observance.
d. competence, confidentiality, integrity, and credibility.
21. Investigating production variances and adjusting the production process are examples of:
a. planning.
b. controlling.
c. decision making.
d. All of these are correct.
22. Which of the following statements is true of total quality management?
PR
a. It is a management philosophy in which manufacturers strive to create an environment that will enable
workers to manufacture zero-defect products.
b. It has replaced the acceptable quality attitudes of the past.
c. It emphasizes the elimination of waste.
d. All of these are correct.
O
23. Activity-based costing:
a. strives to create an environment that will enable workers to manufacture zero-defect products.
FD
b. is the process of choosing among competing alternatives.
c. was established in response to financial scandals.
d. emphasizes the cost of tasks required to produce a product or offer a service.
24. Accountants that have a Certificate in Public Accounting (CPA):
O
a. are the only accountants permitted to serve as external auditors.
b. must pass a national examination and be licensed by the state in which they practice.
c. are responsible for assuring the reliability of a firm's financial statements.
C
d. All of these are correct.
25. Which of the following statements is true of profit maximization?
a. Profit maximization is achieved by considering the financial measures focused only on efficiency.
b. Profit maximization is an objective of financial accounting but not managerial accounting.
c. Profit maximization should be achieved through legal and ethical means.
d. Profit maximization results in maximum cost to and maximum production by a company.
26. The controller of an organization participates in:
a. planning.
b. controlling.
c. decision making.
d. All of these are correct
Page 3
, Name: Class: Date:
Chap 01_8e_Mowen
27. In the United States, individuals who provide assurance service are designated as:
a. Certified Public Accountants.
b. Certified Financial Accountants.
c. Chartered Accountants.
d. Certified Management Accountants.
28. Which of the following members of an organization would normally hold a staff position?
a. Head of security
b. Accounting manager
c. Customer service executive
d. All of these are correct.
29. Which of the following areas is not emphasized by the Certified Management Accountant (CMA) examination?
PR
a. External auditing and internal control
b. Management reporting, analysis, and behavioral issues
c. Decision analysis and information systems
d. Economics, finance, and management
O
30. Which of the following is not an objective of managerial accounting?
a. To produce information for external users, including investors, creditors, customers, suppliers, and
government agencies
FD
b. To provide information for planning an organization’s actions
c. To provide information for evaluating and continuously improving an organization’s actions
d. To provide information for effective decision making by the management of a company
31. Managerial accounting reports are prepared:
O
a. to provide creditors with information useful in making credit decisions.
b. to meet the needs of decision makers within a firm.
c. to present historical information.
C
d. All of these are correct.
32. Which of the following would occupy a line position in a hospital?
a. Cafeteria manager
b. Hospital administrator
c. Chief of surgery
d. None of these are correct.
33. Which of the following statements is true of financial accounting?
a. Financial accounting is directed toward external users.
b. Financial accounting is subject to externally imposed rules.
c. Financial accounting provides information that can be objectively verified and audited.
d. All of these are correct.
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