CHAPTER1:INTRODUCTION

MultipleChoice

a1.Thecontrollerofacompanyorotherorganizationis
a.astaffmanager.
b.anoperatingmanager.
c.anaccountant,notamanager.
d.anaturalmanager.

c2.WhichitemisNOTanIMAStandardforEthicalConduct?
a.Integrity.
b.Competence.
c.Loyalty.
d.Objectivity.

d3.Whichstatementaboutthedegreeofdetailinareportistrue?
a.Itdependsonthelevelofthemanagerreceivingthereport.
b.Itmaydependonthefrequencyofthereport.
c.Itdependsonthetypeofmanagerreceivingthereport.
d.Alloftheabove.

b4.Managerialaccountingissimilartofinancialaccountinginthat
a.botharegovernedbygenerallyacceptedaccountingprinciples.
b.bothdealwitheconomicevents.
c.bothconcentrateonhistoricalcosts.
d.bothclassifyreportedinformationinthesameway.

d5.Managerialaccountingdiffersfromfinancialaccountinginthatitis
a.moreconcernedwiththefuture.
b.moreconcernedwithsegmentsofacompany.
c.lessconstrainedbyrulesandregulations.
d.alloftheabove.

b6.Oneofthewaysmanagerialaccountingdiffersfromfinancialaccountingisthatmanagerial
accounting
a.isboundbygenerallyacceptedaccountingprinciples.
b.classifiesinformationindifferentways.
c.doesnotusefinancialstatements.
d.dealsonlywitheconomicevents.

d7.WhichactivityisNOTnormallyperformedbymanagerialaccountants?
a.Assistingmanagerstointerpretdatainmanagerialaccountingreports.
b.Designingsystemstoprovideinformationforinternalandexternalreports.
c.Gatheringdatafromsourcesotherthantheaccountingsystem.
d.Decidingthebestlevelofinventorytobemaintained.

c8.Conventionalandjustintimemanufacturersboth
a.Maintainlargeinventoriesoftheirproducts.
b.Sellonlytoothermanufacturingcompanies.
c.Desiretomeetcustomers'deadlines.
d.Requireaboutthesameamountofspacetooperate.

d9.Classifyingcostsbybehavioris
a.associatedprimarilywithfinancialaccounting.
b.notrelevanttoacompanythathasonlysellingexpenses.
c.commoninreportspreparedforexternalreaders.
d.noneoftheabove.

a10.WhichisNOTacommonaccountingclassificationofcosts?
a.Bythemethodofpaymentfortheexpenditure.
b.Bytheobjectiveofexpenditure.
c.Bybehavior.
d.Bythefunctionincurringtheexpenditure.

a11.Whichclassificationofcostsismostrelevantforincomestatementstobeusedinternally?
a.Behavior.
b.Function.
c.Methodofpayment.
d.Object.

d12.Thesetofprocessesthattransformrawmaterialsintofinishedproductsisknownasa
a.differentiationstrategy.
b.flexiblemanufacturingsystem.
c.lowestcoststrategy.
d.valuechain.

1
a13.Incomestatementsclassifyingcostsbyobjectshowsuchitemsas
a.taxexpense,wagesexpense,depreciationexpense.
b.costofgoodssold,sellingexpenses,administrativeexpenses.
c.assets,liabilities,owners'equity.
d.alloftheabove.

a14.Theperiodthatbeginswiththearrivalofmaterialsandendswiththeshipmentofacompleted
goodisthe
a.cycletime.
b.manufacturingcell.
c.computerintegratedmanufacturing.
d.performanceperiod.

a15.Whichfunctionismostdirectlyrelatedtomanagementbyobjectives?
a.Planning.
b.Control.
c.Decisionmaking.
d.Reporting.

d16.Whichconsiderationinfluencesthefrequencyofaninternalreport?
a.Thewishesofthemanagersreceivingthereport.
b.Thefrequencywithwhichdecisionsaremadethatrequiretheinformationinthereport.
c.Thecostofpreparingthereport.
d.Alloftheabove.

a17.Ajustintimemanufacturerismorelikelythanaconventionalmanufacturerto
a.receivemorefrequentdeliveriesofmaterials.
b.spendlessmoneyonadvertising.
c.needworkerswithfewerskills.
d.alloftheabove.

c18.Aconventionalmanufacturerismorelikelythanajustintimemanufacturerto
a.haveashortproductioncycle.
b.producegoodsinsmallbatches.
c.holdlargeinventoriestoserveasbuffers.
d.noneoftheabove.

a19.Theprofessionalcertificationmostrelevantformanagerialaccountantsisthe
a.CMA.
b.CPA.
c.CSA.
d.MAS.

d20.Afirmthatiscompetingusinga_______________________strategyisattemptingtocreatea
perceptionofuniquenessthatwillpermitahighersellingprice.
a.valuechain
b.lowestcost
c.leadtime
d.differentiation

b21.Planningandcontrolare
a.differentnamesforthesamething.
b.thebasicfunctionsofmanagement.
c.describedequallywellbytheterms"decisionmaking"and"performanceevaluation."
d.exemplifiedby,respectively,financialstatementsandbudgeting.

a22.Incontrasttoabalancesheet,anincomestatement
a.isforaperiodoftime,abalancesheetisatapointintime.
b.givesinformationaboutcashandabalancesheetdoesnot.
c.ispreparedafterthestatementofretainedearnings.
d.hastwocolumns,whileabalancesheethasmorethantwo.

c23.Onecharacteristicoftheconventionalmanufacturingenvironmentis
a.flexiblemanufacturingsystems.
b.manufacturingcells.
c.ajustincasephilosophy.
d.ahighdegreeofqualitycontrol.

d24.Acharacteristicofthejustintimemanufacturingenvironmentis
a.frequentdeliveriesofmaterials.
b.manufacturingcells.
c.littleornoinventoryoffinishedproduct.
d.alloftheabove.

d25.Conventionalandjustintimemanufacturersdifferinthattheconventionalmanufactureris
likelyto
a.beanewentrantintoitsindustry.

2
b.needlessstoragespacethanitsJITcompetitors.
c.givelesscredibilitytomanagementaccountingreports.
d.havealongerproductioncyclethanitsJITcompetitors.

TrueFalse

F1.Publishedfinancialstatementsshowcostsclassifiedbybehavior.

T2.Generallyacceptedaccountingprinciplesgovernfinancialaccountingbutnotmanagerial
accounting.

T3.Economiceventsaretherawdataforbothfinancialandmanagerialaccounting.

F4.Internalfinancialstatementsmustbepreparedusinggenerallyacceptedaccountingprinciples.

T5.Theformandcontentofreportscaninfluencedecisionsmadebymanagers.

F6.Managementbyobjectivesandmanagementbyexceptionaretwonamesforthesamegeneral
managementprinciple.

F7."Proforma"isthenamegiventoanincomestatementthatclassifiescostsbyfunction.

T8.Somemanagerialaccountingreportscontaincostsnotincorporatedinthebasicaccounting
system.

F9.Aprofessionalexaminationexiststotestthecompetenceoffinancialaccountants,butnotof
managerialaccountants.

F10.Managerialaccountantsshould,buthavenoobligationto,maintaintheirprofessionalskills.

Problems

1.Basedonthefollowing,computetotalowners'equity.

Cash$8,000Totalnoncurrentliabilities$0
Totalassets$64,000Retainedearnings$16,000
Totalcontributed
capital$12,000Currentliabilities$36,000

SOLUTION:

$28,000($16,000RE+$12,000contributedcapital)

2.Basedonthefollowing,computetotalnoncurrentassets.

Totalcurrentassets$600,000
Totalcurrentliabilities$240,000
Retainedearnings$162,000
Totalnoncurrentliabilities$710,000
Totalcontributedcapital$360,000

SOLUTION:

$872,000($240,000+$710,000+$360,000+$162,000$600,000)

3.Basedontheinformationprovided,computeaccruedwagespayableattheendof20X4.

Accruedwagespayable,beginningof20X4$14,000
Wagesexpensefor20X4$45,000
Cashpaidin20X4forwages$42,500

SOLUTION:

16,500($14,000+$45,000$42,500)

4.Usingthefollowingdata,findthemissingitems.

Totalassets,beginningofyear.......$160
Totalassets,endofyear..........$240
Totalliabilities,beginningofyear....$120
Totalowners'equity,endofyear......$60
Netincomeforyear............$24
Additionalinvestmentduringyear......$16
Contributedcapital,beginningoftheyear.$30

a.Totalowners'equityatthebeginningoftheyear.
b.Totalliabilitiesattheendoftheyear.

3

c.Retainedearningsatthebeginningoftheyear.

d.Endoftheyearretainedearnings.

e.Dividendsdeclaredduringtheyear.

SOLUTION:

a.TotalOE,$40($160$120)

b.Totalliabilities,$180($240$60)

c.BeginningRE,$10($40beginningowners'equity$30)

d.EndingRE,$14[$60($30+$16)]

e.Dividendsdeclared,$20($10ofbegRE+$24$14endingRE)

5.Basedonthefollowing,computetotalowners'equity.

Cash$30,000Totalnoncurrentliabilities$18,000
Totalassets$126,000Retainedearnings$24,000
Currentliabilities$56,000

SOLUTION:

$52,000(126,000Totalassets$56,000currentliabilities$18,000totalnoncurrent
liabilities)

6.Basedonthefollowing,computetotalnoncurrentassets.

Totalcurrentassets$135,000
Totalcurrentliabilities$70,000
Retainedearnings$47,500
Totalnoncurrentliabilities$182,500
Totalowners'equity$125,000

SOLUTION:

$242,500($70,000+$182,500+$125,000$135,000)

7.Basedontheinformationprovided,computeaccruedtaxespayableattheendof20X9.

Accruedtaxes,beginningof20X9$244,000
Taxesexpensefor20X9$760,000
Cashpaidin20X9fortaxes$750,000

SOLUTION:

$254,000($244,000+$760,000$750,000)

8.Basedontheinformationprovided,computeprepaidsuppliesattheendof20X9.

Prepaidsupplies,beginningof20X9$10,000
Suppliesexpensefor20X9$210,000
Cashpaidin20X9forsupplies$216,000

SOLUTION:

$16,000($10,000+$216,000$210,000)

9.Usingthefollowingdata,findthemissingitems.

Totalassets,beginningofyear.......$1,050
Totalassets,endofyear..........$1,200
Totalliabilities,beginningofyear....$630
Totalowners'equity,endofyear......$480
Netincomeforyear............$164
Additionalcapitalinvestedduringyear...$50
Contributedcapital,beginningoftheyear.$200

a.Totalowners'equityatthebeginningoftheyear.

b.Totalliabilitiesattheendoftheyear.

c.Retainedearningsatthebeginningoftheyear.

4
d.Endoftheyearretainedearnings.

e.Dividendsdeclaredduringtheyear.

SOLUTION:

a.TotalOE,$420($1,050$630)

b.Totalliabilities,$720($1,200$480)

c.BeginningRE,$220($420beginningowners'equity$200)

d.EndingRE,$230[$480($200+$50)]

e.Dividendsdeclared,$154($220ofbegRE+$164$230endingRE)

10.Usingthefollowingdata,findthemissingitems.

Totalliabilities,beginningofyear.....$440
Totalliabilities,endofyear........$490
Totalowners'equity,beginningofyear....$340
Totalassets,endofyear...........$950
Dividendsdeclaredduringtheyear.......$74
Additionalcapitalinvestedduringyear....$90
Contributedcapital,beginningoftheyear..$240

a.Totalassetsatthebeginningoftheyear.

b.Totalowners'equityattheendoftheyear.

c.Retainedearningsatthebeginningoftheyear.

d.Endoftheyearretainedearnings
e.Netincomeforyear.

SOLUTION:

a.Totalassets,$780($440+$340)
b.Totalowners'equity,$460($950$490)
c.BeginningRE,$100($340beginningowners'equity$240)
d.EndingRE,$130[$460($240+$90)]
e.Netincome,$104($130ofendingRE+$74$100beginningRE)