CHAPTER 1
THE ACCOUNTANT’S ROLE IN THE
ORGANIZATION
TRUE/FALSE
1. Management accounting information focuses on external reporting. F F F F F
Answer: False Difficulty: 1 Objective: 1
Terms to Learn:
F F management accounting F F
Management accounting information focuses on internal reporting.
F F F F F F
2. A good cost accounting system is narrowly focused on a continuous reduction of
F F F F F F F F F F F F F
costs.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn:
F F cost accounting F
A good cost accounting system is broadly focused to provide information that helps
F F F F F F F F F F F F F
managers at all levels implement, monitor, and evaluate company strategies.
F F F F F F F F F
3. Modern cost accounting plays a significant role in management decision making.
F F F F F F F F F F
Answer: True Difficulty: 1 Objective: 1
Terms to Learn:
F F cost accounting F
4. The balance sheet, income statement, and statement of cash flows are used for
F F F F F F F F F F F F F
financial accounting, but not for management accounting.
F F F F F F
Answer: False Difficulty: 1 Objective: 1
Terms to Learn:
F F financial accounting F
The balance sheet, income statement, and statement of cash flows are used for
F F F F F F F F F F F F F
financial accounting and also for management accounting.
F F F F F F
5. Financial accounting is broader in scope than management accounting.
F F F F F F F F
Answer: False F Difficulty: 2
F Objective: 1 F F F F
Terms to Learn:
F F financial accounting, management accounting F F F F
Management accounting is broader in scope than financial accounting.
F F F F F F F F
6. Cost accounting measures and reports short-term, long-term, financial, and
F F F F F F F F F
nonfinancial information. F
Answer: True Difficulty: 2 Objective: 1
Terms to Learn:
F F cost accounting F
1-1
,7. Cost management provides information that helps increase value for customers.
F F F F F F F F F
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: F F cost management F
8. An ideal database should consist of data that could be used for a single purpose
F F F F F F F F F F F F F F F
only.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn: F F management accounting F
An ideal database should be able to be used for multiple purposes.
F F F F F F F F F F F
9. An Enterprise Resource Planning (ERP) System is a single database that collects
F F F F F F F F F F F F
data and feeds into applications that support each of the company’s business
F F F F F F F F F F F F
activities, such as purchases, production, distribution, and sales.
F F F F F F F
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: F management accounting
10. Cost accounting provides information only for management accounting purposes.
F F F F F F F F
Answer: False Difficulty: 1 Objective: 1
Terms to Learn: F F cost accounting F
Cost accounting provides information for financial accounting as well as for management
F F F F F F F F F F F F
accounting purposes. F
11. Cost management involves long-term and short-term decisions that attempt to
F F F F F F F F F F
increase value for customers and lower costs of products or services.
F F F F F F F F F F
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: F F cost management F
12. All strategies should be evaluated regarding the resources and capabilities of the
F F F F F F F F F F F F
company.
Answer: True Difficulty: 1 Objective: 2
Terms to Learn: F strategy
13. The best-designed strategies are valuable whether or not they are effectively
F F F F F F F F F F F
implemented.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn: F F strategy F
Implementation is essential or the strategy is useless.
F F F F F F F
1-2
,14. The key to a company’s success is creating value for customers while differentiating
F F F F F F F F F F F F F
itself from its competitors.
F F F
Answer: True Difficulty: 1 Objective: 2
Terms to Learn:
F strategy
15. The key to a company’s success is always to be the low cost producer in a particular
F F F F F F F F F F F F F F F F F
industry.
Answer: False Difficulty: 2 Objective: 2
Terms to Learn:
F F strategy
The low cost producer in a particular industry will not necessarily be successful.
F F F F F F F F F F F F
16. Companies generally follow one of two basic strategies: 1) providing a quality
F F F F F F F F F F F F
product or service at low prices, or 2) offering a unique product or service often
F F F F F F F F F F F F F F F
priced higher than competing products.
F F F F
Answer: True Difficulty: 2 Objective: 2
Terms to Learn:
F strategy
17. Management accountants should have little or no role in deciding on a company’s
F F F F F F F F F F F F F
strategy.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn:
F F strategy
Management accountants should play a significant role in deciding on a company’s
F F F F F F F F F F F F
strategy.
18. Companies can decide on an appropriate strategy based strictly on internally
F F F F F F F F F F F
available information. F
Answer: False Difficulty: 1 Objective: 2
Terms to Learn:
F F strategy
Companies must obtain external information as well as internal information to
F F F F F F F F F F F
decide on an appropriate strategy.
F F F F
19. Strategic cost management describes cost management that specifically focuses on
F F F F F F F F F F
strategic issues. F
Answer: True Difficulty: 1 Objective: 2
Terms to Learn:
F F strategic cost management F F
1-3
, 20. The supply chain refers to the sequence of business functions in which customer
F F F F F F F F F F F F F
usefulness is added to products or services. F F F F F F
Answer: False Difficulty: 1 Objective: 3
Terms to Learn: F supply chain
F F
The value chain refers to the sequence of business functions in which customer usefulness
F F F F F F F F F F F F F F
is added to products or services.
F F F F F
21. An effective way to cut costs is to eliminate activities that do not improve the
F F F F F F F F F F F F F F F
product attributes that customers value.
F F F F
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: F F cost management F
22. For optimal planning success it is best if each business function within the value
F F F F F F F F F F F F F F
chain is performed one at a time in sequence.
F F F F F F F F
Answer: False Difficulty: 1 Objective: 3
Terms to Learn: F value chain
F F
Optimally, success is achieved when two or more of the individual business
F F F F F F F F F F F F
functions work concurrently as a team. F F F F F
23. For best results, cost management emphasizes independently coordinating supply
F F F F F F F F F
chain activities within your company and not interfering with other companies.
F F F F F F F F F F
Answer: False Difficulty: 2 Objective: 3
Terms to Learn: F cost management
F F
Cost management emphasizes integrating and coordinating supply chain activities
F F F F F F F F F
across all companies within the supply chain.
F F F F F F
24. Technological innovation has led to shorter product-life cycles and a need to bring
F F F F F F F F F F F F F
new products to market more rapidly.
F F F F F
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: F F design of products, services, or processes
F F F F F
25. Key success factors include cost, quality, timeliness, and innovation.
F F F F F F F F
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: F value chain F
1-4
THE ACCOUNTANT’S ROLE IN THE
ORGANIZATION
TRUE/FALSE
1. Management accounting information focuses on external reporting. F F F F F
Answer: False Difficulty: 1 Objective: 1
Terms to Learn:
F F management accounting F F
Management accounting information focuses on internal reporting.
F F F F F F
2. A good cost accounting system is narrowly focused on a continuous reduction of
F F F F F F F F F F F F F
costs.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn:
F F cost accounting F
A good cost accounting system is broadly focused to provide information that helps
F F F F F F F F F F F F F
managers at all levels implement, monitor, and evaluate company strategies.
F F F F F F F F F
3. Modern cost accounting plays a significant role in management decision making.
F F F F F F F F F F
Answer: True Difficulty: 1 Objective: 1
Terms to Learn:
F F cost accounting F
4. The balance sheet, income statement, and statement of cash flows are used for
F F F F F F F F F F F F F
financial accounting, but not for management accounting.
F F F F F F
Answer: False Difficulty: 1 Objective: 1
Terms to Learn:
F F financial accounting F
The balance sheet, income statement, and statement of cash flows are used for
F F F F F F F F F F F F F
financial accounting and also for management accounting.
F F F F F F
5. Financial accounting is broader in scope than management accounting.
F F F F F F F F
Answer: False F Difficulty: 2
F Objective: 1 F F F F
Terms to Learn:
F F financial accounting, management accounting F F F F
Management accounting is broader in scope than financial accounting.
F F F F F F F F
6. Cost accounting measures and reports short-term, long-term, financial, and
F F F F F F F F F
nonfinancial information. F
Answer: True Difficulty: 2 Objective: 1
Terms to Learn:
F F cost accounting F
1-1
,7. Cost management provides information that helps increase value for customers.
F F F F F F F F F
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: F F cost management F
8. An ideal database should consist of data that could be used for a single purpose
F F F F F F F F F F F F F F F
only.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn: F F management accounting F
An ideal database should be able to be used for multiple purposes.
F F F F F F F F F F F
9. An Enterprise Resource Planning (ERP) System is a single database that collects
F F F F F F F F F F F F
data and feeds into applications that support each of the company’s business
F F F F F F F F F F F F
activities, such as purchases, production, distribution, and sales.
F F F F F F F
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: F management accounting
10. Cost accounting provides information only for management accounting purposes.
F F F F F F F F
Answer: False Difficulty: 1 Objective: 1
Terms to Learn: F F cost accounting F
Cost accounting provides information for financial accounting as well as for management
F F F F F F F F F F F F
accounting purposes. F
11. Cost management involves long-term and short-term decisions that attempt to
F F F F F F F F F F
increase value for customers and lower costs of products or services.
F F F F F F F F F F
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: F F cost management F
12. All strategies should be evaluated regarding the resources and capabilities of the
F F F F F F F F F F F F
company.
Answer: True Difficulty: 1 Objective: 2
Terms to Learn: F strategy
13. The best-designed strategies are valuable whether or not they are effectively
F F F F F F F F F F F
implemented.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn: F F strategy F
Implementation is essential or the strategy is useless.
F F F F F F F
1-2
,14. The key to a company’s success is creating value for customers while differentiating
F F F F F F F F F F F F F
itself from its competitors.
F F F
Answer: True Difficulty: 1 Objective: 2
Terms to Learn:
F strategy
15. The key to a company’s success is always to be the low cost producer in a particular
F F F F F F F F F F F F F F F F F
industry.
Answer: False Difficulty: 2 Objective: 2
Terms to Learn:
F F strategy
The low cost producer in a particular industry will not necessarily be successful.
F F F F F F F F F F F F
16. Companies generally follow one of two basic strategies: 1) providing a quality
F F F F F F F F F F F F
product or service at low prices, or 2) offering a unique product or service often
F F F F F F F F F F F F F F F
priced higher than competing products.
F F F F
Answer: True Difficulty: 2 Objective: 2
Terms to Learn:
F strategy
17. Management accountants should have little or no role in deciding on a company’s
F F F F F F F F F F F F F
strategy.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn:
F F strategy
Management accountants should play a significant role in deciding on a company’s
F F F F F F F F F F F F
strategy.
18. Companies can decide on an appropriate strategy based strictly on internally
F F F F F F F F F F F
available information. F
Answer: False Difficulty: 1 Objective: 2
Terms to Learn:
F F strategy
Companies must obtain external information as well as internal information to
F F F F F F F F F F F
decide on an appropriate strategy.
F F F F
19. Strategic cost management describes cost management that specifically focuses on
F F F F F F F F F F
strategic issues. F
Answer: True Difficulty: 1 Objective: 2
Terms to Learn:
F F strategic cost management F F
1-3
, 20. The supply chain refers to the sequence of business functions in which customer
F F F F F F F F F F F F F
usefulness is added to products or services. F F F F F F
Answer: False Difficulty: 1 Objective: 3
Terms to Learn: F supply chain
F F
The value chain refers to the sequence of business functions in which customer usefulness
F F F F F F F F F F F F F F
is added to products or services.
F F F F F
21. An effective way to cut costs is to eliminate activities that do not improve the
F F F F F F F F F F F F F F F
product attributes that customers value.
F F F F
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: F F cost management F
22. For optimal planning success it is best if each business function within the value
F F F F F F F F F F F F F F
chain is performed one at a time in sequence.
F F F F F F F F
Answer: False Difficulty: 1 Objective: 3
Terms to Learn: F value chain
F F
Optimally, success is achieved when two or more of the individual business
F F F F F F F F F F F F
functions work concurrently as a team. F F F F F
23. For best results, cost management emphasizes independently coordinating supply
F F F F F F F F F
chain activities within your company and not interfering with other companies.
F F F F F F F F F F
Answer: False Difficulty: 2 Objective: 3
Terms to Learn: F cost management
F F
Cost management emphasizes integrating and coordinating supply chain activities
F F F F F F F F F
across all companies within the supply chain.
F F F F F F
24. Technological innovation has led to shorter product-life cycles and a need to bring
F F F F F F F F F F F F F
new products to market more rapidly.
F F F F F
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: F F design of products, services, or processes
F F F F F
25. Key success factors include cost, quality, timeliness, and innovation.
F F F F F F F F
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: F value chain F
1-4
