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Managerial Accounting Exam Answers 2

Managers responsibilities in an organization include decision making and continuous feedback. Of the three direct responsibilities of a manager, which one covered comparing the actual results to the budget the manager is responsible for?
a. Directing
b. Planning
c. Controlling
d. Decision making

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Controlling

Which of the following management responsibilities often involves evaluating the results of operations against the budget?
a. Directing
b. Planning
c. Controlling
d. None of the above

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c. Controlling

Managerial accounting differs from financial accounting in that the managerial accounting.
A. tends to report on the company as a whole rather than segments of the company.
B. emphasizes data relevance over data objectivity.
C. is used primarily by external decision makers.
D. is required by Generally Accepted Accounting Principles (GAAP).

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B. emphasizes data relevance over data objectivity.

Which of the following corprate positions is responsible for raising capital and investing funds
A. Board of directors
B. Chief executive officer (CEO)
C. Chief financial officer (CFO)
D. Internal audit
E. Treasurer
F. Chief Operating Officer (COO)

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Treasurer

Which of the following management responsibilities often involves evaluating the results of operations against the budget?
a. Directing
b. Planning
c. Controlling
d. None of the above

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c. Controlling

Which of the following corporate positions is responsible for general financial accounting, managerial accounting, and tax reporting?
A. Controller
B. Treasurer
C. Internal audit
D. Chief operating officer (COO)

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A. Controller

Which of the following organizations is the professional association specifically for management accountants?
A. FASB
B. AICPA
C. IMA
D. IFRS

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C. IMA

Which of the following professional standards requires management accountants to continually develop their knowledge and skills?
A. Competence
B. Confidentiality
C. Integrity
D. Credibility

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A. Competence

Which of the following professional standards requires management accountants to not disclose private information about their organizations?
A. Competence
B. Confidentiality
C. Integrity
D. Credibility

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B. Confidentiality

Which of the following professional standards requires management accountants to mitigate conflicts of interest
A. Competence
B. Confidentiality
C. Integrity
D. Credibility

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C. Integrity

Due to many organizations reporting fraudulent financial statements, companies are required to for an audit committee. An audit Committee is/does all of the follow except:
Due to many organizations reporting fraudulent financial statements, companies on certain stock exchanges are required to form an audit committee. An audit committee is/does all of the following except:
A.) Internal audit reports to the audit committee
B.) Hire the external auditors
C.) Are employees of the company
D.) Sub-set of the Board of Directors.

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C.) Are employees of the company

Ethical Standards are critical for management accountants. Which one best relates to Integrity?
A. Monitoring subordinates' activities to ensure compliance with confidential information.
B. Inform all relevant parties regarding appropriate use of confidentail information.
C. Abstain from engaging in or supporting any activity that might discredit the profession.
D. Communicate information fairly and objectively.

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Abstain from engaging in or supporting any activity that might discredit the profession.

Ethical Standards are critical for management accountants. Which one best relates to Credibility?
A. Inform all relevant parties regarding appropriate use of confidentail information.
B. Abstain from engaging in or supporting any activity that might discredit the profession.
C. Communicate information fairly and objectively.
D. Monitoring subordinates' activities to ensure compliance with confidential information.

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Communicate information fairly and objectively

Ethical Standards are critical for management accountants. Which of the following relates to Competence?
Ethical Standards are critical for management accountants. Which one best relates to Competence?
A.) Mitigate actual conflicts of interest
B.) Inform all relevant parties regarding appropriate use of confidential information
C.) Communicate information fairly and objectively
D.) Perform professional duties in accordance with laws, regulations and technical standards

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D.) Perform professional duties in accordance with laws, regulations and technical standards.

Which of the following requires the company's CEO and CFO to assume responsibility for the company's financial statements and disclosures?
A. Sarbanes-Oxley Act of 2002 (SOX)
B. Institute of Management Accountants (IMA)
C. Enterprise Resource Planning (ERP)
D. Lean operations

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A. Sarbanes-Oxley Act of 2002 (SOX)

Of the following skills, which are needed by today's management accountants?
A. Knowledge of both financial and managerial accounting.
B. Oral and written communication skills
C. Knowledge of how a business functions
D. All of the above

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D. All of the above

Of the following skills, which are needed by today's management accountants?
A. Strategic thinking
B. Cost management
C. Decision analysis
D. All of the above

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D. All of the above

This course is dealing with managerial accounting versus financial accounting. One of the biggest differences between the two is.
A. financial accounting deals with internal reports and managerial accounting deals with making information available to third parties (investors, creditors, shareholders).
B. managerial accounting is not as important as financial accounting.
C. managerial accounting has strict deadlines when it provides information to managers and in financial accounting organiazation issue reports to investors, shareholders and creditors when it thinks it is needed.
D. managers and other internal organization users will receive various reports to help them achieve their goals and objectives, whereas financial accounting deals with a set of financial statements that are provided to external users.

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Managers and other internal organization users will receive various reports to help them achieve their goals and objectives, whereas financial accounting deals with a set of financial statements that are provides to external users.

Which of the following is false?
A. Globalization has increased the necessity for more detailed and accurate cost information.
B. The triple bottom line focuses on three items: net income, net assets, and return on investment.
C. ERP systems integrate information from all company functions into a centralized data warehouse.
D. Lean operations is a philosophy and business strategy of operating without waste.

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B. The triple bottom line focuses on three items: net income, net assets, and return on investment.

Lean operations is a philosophy and business strategy of operating without waste
A. TRUE
B. FALSE

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True

Globalization has increased the necessity for more detailed and accurate cost information. A. TRUE
B. FALSE

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True

ERP systems integrate information from all company functions into a centralized data warehouse. A. TRUE
B. FALSE

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True

American Eagle Outfitters classifies the denim jeans on the shelves at its retail locations as:
A) raw materials inventory.
B) merchandise inventory.
C) finished goods inventory.
D) work in process inventory.

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Merchandise inventory

Which of the following is an example of overhead expense in a factory?
a. Wages of machine operators
b. Wages of administrators in the corporate office
c. Salaries of salespersons
d. Wages of factory maintenance personnel

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d. Wages of factory maintenance personnel

Which of the following is not part of manufacturing overhead?
A. Period costs, such as depreciation on office computers
B. Indirect materials, such as machine lubricants
C. Indirect labor, such as plant forklift operators' wages
D. Other indirect manufacturing costs, such as plant utilities

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A. Period costs, such as depreciation on office computers

Which of the following are part of manufacturing overhead?
A. Other indirect manufacturing costs, such as plant utilities
B. indirect labor, such as forklift operators' wages
C. Indirect materials, such as machine lubricants
D. All of the above

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D. All of the above

Which of the following types of companies will always have the Cost of Goods Sold account on their income statements?
A. Service and merchandising companies
B. Service and manufacturing companies
C. Service, merchandising, and manufacturing companies
D. Merchandising and manufacturing companies

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Merchandising and manufacturing companies.

Which of the following are merchandising companies?
A. Retailers
B. Wholesalers
C. Manufacturers
D. Both retailers and wholesalers

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Both retailers and wholesalers.

Which of the following are an activity in the value chain?
A. Marketing
B. Customer Service
C. Design
D. All of the above

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All of the above

Customer Service, Design, Marketing.

Which of the following is not an activity in the value chain?
A. Marketing
B. Customer Service
C. Design
D. Administration

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D. Administration

All of the following are business trends affecting management accounting except:
A. shifting economy.
B. sustainability.
C. big data.
D. all of the above.

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D. All of the above

Which of the following types of companies would have work in process inventory?
A. Service
B. Merchandising
C. Manufacturing
D. All of the above

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C. Manufacturing

A cost that can be traced to a cost object is known as a
A. period cost.
B. product cost.
C. direct cost.
D. indirect cost.

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C. Direct Cost

Which of the following ethical standards are required of management accountants by the IMA's Statement of Ethical Professional Practice?
A. Integrity
B. Competence
C. Confidentiality
D. All of the above

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all of the above

Period costs are often referred to as
A. manufacturing expenses.
B. operating expenses.
C. direct costs.
D. product costs.

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B. Operating Expenses

Which of the following is a calculated amount, rather than a general ledger account?
A. Finished goods inventory
B. Cost of goods manufactured
C. Sales revenue
D. Cost of goods sold

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B. Cost of goods manufactured

Which box on the value chain captures the cost of building a prototype of the product?
A. Design
B. Marketing
C. Distribution
D. Production or Purchases

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Design

When building a product, costs related to it are either direct or indirect. What category is the manager of the factory where the product is produced?
When building a product, costs related to it are either direct or indirect. What category is the plant manager of the factory where the product is produced?
When building a product, costs related to it are either direct or indirect. What category is utilities of the plant factory where the product is produced?
A. Period costs
B. Direct labor
C. Direct materials
D. Manufacturing overhead

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D. Manufacturing overhead

The value chain describes the costs associated with making a product. What box(es) are expensed immediately when incurred on the income statement as operating expenses/SGA ("period costs")?
A. Marketing
B. All of them, except production or purchases
C. All of them
D. Production or Purchases

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All of them, except production or purchases

Costs of Goods Sold of a manufacturing represents the costs related to building a product that are expensed when it is sold. To determine Costs of Goods Sold, three formulas were used representing the three different categories of inventory. Which schedule is based on raw materials inventory?
A. Income Statement
B. Costs of Goods Manufactured
C. Cost of Goods Sold
D. Direct Materials Used

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Direct Materials Used

Which of the following documents specifies the materials needed to produce a job?
A. Raw materials records
B. Production schedule
C. Bill of materials
D. Receiving report

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Bill of materials

Which of the following is false?
A. Non-manufacturing costs can be assigned to jobs only for internal decision making, never for external financial reporting.
B. Direct costing focuses on only the direct costs found on the job cost record.
C. A cost-plus price is determined by adding a markup to the cost.
D. Job cost information is not useful for assessing the profitability of different product

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Job cost information is not useful for assessing the profitability of different products.

Which of the following is true?
A. If manufacturing overhead is underallocated, then jobs will be overcosted.
B. If manufacturing overhead is overallocated, then jobs will be undercosted.
C. Both of the statements are true.
D. None of the statements is true.

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none of the statements is true

Assuming the amount of manufacturing overhead overallocation or underallocation is not material, which account is adjusted at the end of the period?
Assuming the amount of manufacturing overallocation or under allocation is not material, which account is adjusted at the end of the period?
A. Raw Materials Inventory
B. Cost of Goods Sold
C. Work in Process Inventory
D. Sales Revenue

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Cost of Goods Sold

Chapter 3 discusses job costing. Process costing was briefly discussed. Which company listed below would most likely use process costing.
A. Engineering firm
B. Law firm
C. custom jewelry maker
D. soda pop manufacturer

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D. soda pop manufacturer

What form is used to accumulate the all costs associated with making the product?
A. labor time record
B. raw materials record
C. materials requisition
D. job cost record

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D. job cost record

When is the predetermined manufacturing overhead rate calculated and what is it used for?
A. end of the year; to allocate direct materials, direct labor, and manufacturing overhead to a job during the year
B. end of the year; to allocate manufacturing overhead to a job during the year
C. beginning of the year; to allocate manufacturing overhead to a job during the year
D. beginning of the year; to allocate direct materials, direct labor, and manufacturing overhead to a job during the year

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beginning of the year; to allocate manufacturing overhead to a job during the year

For services firms, how are indirect period costs allocated?
A. indirect period costs are not allocated to individual jobs
B. allocated to each job based on the indirect cost allocation rate
C. allocated to each job based on management judgement after each job
D. allocated to each job based on the predetermined manufacturing overhead rate

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allocated to each job based on the indirect cost allocation rate

The amount of manufacturing overhead recorded on a job cost record for a particular job is found by
A. allocating manufacturing overhead to the job.
B. tracing manufacturing overhead to the job.
C. either tracing or allocating manufacturing overhead costs (management's choice).
D. None of the answers listed is correct.

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allocating manufacturing overhead to the job.

When allocating MANUFACTURING OVERHEAD to a job...
it should be allocated based on the predetermined manufacturing overhead rate when the job is being completed.

Which of the following is an example of direct labor?
Wages of a machine operator.
Lucky Cow Dairy provided with the following expense information for May:
Assembly - line workers' wages - $72,000
Caps for milk bottles - $3,000
Reconfiguring the assembly line - $125,000
Customer support hotline - $10,000
Delivery expenses - $20,000
Depreciation on factory equipment - $75,000
Plastic milk bottles - $52,000
Salaries of salespeople - $63,000
Salaries of research scientists - $70,000
Customer toll - free order line - $6,000

What is the total cost for the production category of the value chain?
$72,000
+ $3,000
+ $75,000
+ $52,000
= $202,000

Manufacturing overhead is over allocated if the amount
allocated during the period is greater than the actual incurred.

The predetermined indirect cost allocation rate is computed as
total estimated indirect cost / total estimated amount of the allocation base.

There are three different type of companies discussed in chapter 2. Which one has no inventory?
Service

Which box on the value chain captures the cost of recalls on the products?
Customer Service.

Which of the following types of companies would carry raw materials, work in process, and finished goods inventory?
Manufacturing

In the future, after graduation, you will end up working with various individuals across the organization, not just employees in your own department. What term is best associated with this?
Cross-functional teams

Us companies must follow GAAP or IFRS in their _____________ systems.
Financial Accounting

Financial accounting develops reports for external parties such as ______ and ______.
Creditors & Shareholders

When managers evaluate the company's performance to the plan, they are performing the ______ role of management.
Controlling

_______ are decision makers inside a company
Managers

______________ provides information on a company's past performance to external parties.
Financial Accounting

__________ systems are not restricted by GAAP or IFRS but are chosen by comparing the costs versus the benefits of the system
Managerial Accounting

Choosing goals and the means to achieve them is the ________ function of management.
Planning.

_____________ systems report on various segments or business units of the company.
Managerial Accounting

____________ statements of public companies are audited annually by CPA's
Financial Accounting

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