Chapt er1 Manager i alAccount i ngandt heBusi nessEnvi r onment
True/False
1. F Medium
Decision making is a distinct management activity that should be separated from planning, directing and motivating, and controlling activities.
2. T Easy
hen carrying out their directing and motivating activities, managers mobili!e the organi!ation"s organi!ation"s human and other resources so that the organi!ation"s plans are carried out.
#. F Medium
hen carrying out planning activities, managers rely on feedback to ensure that the plan is actually carried out and is appropriately modified as circumstances change.
$. F Medium
hen carrying out their controlling activities, managers select a course of action and specify ho% the action %ill be implemented.
&. T Medium
The controller occupies a staff position in an organi!ation.
'. T Easy
(ersons occupying staff positions provide support and assistance to other parts of the organi!ation.
). T Easy
*nformal relationships and channels of communication often develop that do not appear on the organi!ation chart.
+. T Medium
Managerial accounting places less emphasis on precision and more emphasis on fleibility and relevance of data than does financial accounting.
-. T Easy
Managerial accounting is not governed by generally accepted accounting principles /00(.
1. T Easy
3ust4in4time is a production system in %hich units are produced and materials are purchased only as needed to meet actual customer demand.
11. F Medium
*n a 5ust4in4time system, the flo% of goods is controlled by a push approach in %hich partially completed units are 6pushed6 for%ard to the net %orkstation as soon as %ork is completed at the prior %orkstation.
12.
There is is a greater da danger of of un undermining em employee mo morale %i %ith (r (rocess 7e 7eengineering th than Managerial Accounting, 9/e
1
T Medium
%ith Total 8uality Management
1#. T Easy
Total 8uality Management involves a focus on serving the customer and systematic problem4 solving using teams made up of front4line %orkers.
1$. T Easy
The (lan4Do40ct49heck 9ycle involves applying the scientific method to problem4solving.
1&. T Easy
*n (rocess 7eengineering, a business process is diagrammed in detail, :uestioned, and then completely redesigned in order to eliminate unnecessary steps, reduce opportunities for errors, and reduce costs.
1'. F Easy
*n 3*T purchasing, as many suppliers as possible are used so as to avoid relying too much on a fe% suppliers.
1). F Medium
Efforts designed to increase the rate of output should generally be applied to non4constraint %orkstations.
1+. T Easy
The ;tandards of Ethical 9onduct promulgated by the *nstitute of Management 0ccountants specifically states, among other things, that management accountants have a responsibility to disclose fully all relevant information that could be reasonably be epected to influence an intended user"s understanding of the reports, comments and recommendations presented.
1-. F Medium
The ;tandards of Ethical 9onduct promulgated by the *nstitute of Management 0ccountants specifically states, among other things, that management accountants have a responsibility to inform responsible 5ournalists of any %rongdoing they uncover in the organi!ation.
2 T Easy
ork in process inventories consist of units that are only partially complete and %ill re:uire further %ork before they are ready for sale to a customer.
Managerial Accounting, 9/e
2
Multiple 9hoice 21. 9 Medium
22. D Easy
The plans of management are epressed formally in> a. the annual report to shareholders. b. Form 148 submitted to the ;ecurities and Echange 9ommission ;E9. c. performance reports. d. budgets.
2#. ? Easy
0 staff position> a. relates directly to the carrying out of the basic ob5ectives of the organi!ation. b. is supportive in nature, providing service and assistance to other parts of the organi!ation. c. is superior in authority to a line position. d. none of these.
2$. ? Medium
hich of the follo%ing persons %ould occupy a line position in a department store= *. ;ales manager **. Manager, furniture department ***. Manager, advertising department *@. Manager, personnel department a.
2&. ? Easy
2'. 0 Easy
The controller occupies> a. a line position. b. a staff position. c. neither a line nor a staff position, since the accounting independent. d. both a line and a staff position. Managerial accounting> a. has its primary emphasis on the future. b. is re:uired by regulatory bodies such as the ;E9. c. focuses on the organi!ation as a %hole, rather than on the d. 7esponses a, b, and c are all correct.
Managerial Accounting, 9/e
department must be
organi!ation"s segments.
3
2). D Medium
hich of the follo%ing statements are true regarding financial and managerial accounting= *. ?oth are mandatory. **. ?oth rely on the same underlying financial data. ***. ?oth emphasi!e the segments of an organi!ation, rather than 5ust looking at the organi!ation as a %hole. *@. ?oth are geared to the future, rather than to the past. a. *, **, ***, and *@ b.
2+. D Easy
Managerial accounting places considerable %eight on> a. generally accepted accounting principles. b. the financial history of the entity. c. ensuring that all transactions are properly recorded. d. detailed segment reports about departments, products, and
customers.
2-. 9 Easy
For internal uses, managers are more concerned %ith receiving information that is> a. completely ob5ective and verifiable. b. completely accurate and precise. c. relevant, fleible, and immediately available. d. relevant, completely accurate, and precise.
#. ? Medium
The benefits of a successful 3ust4*n4Time system include all of the follo%ing ecept> a. funds tied up in inventories are released for use else%here. b. inventory buffers are increased. c. throughput time is reduced. d. defect rates are decreased.
#1. D Medium
0 key concept of the 3*T inventory system is> a. the ra% materials, %ork in process, and finished goods inventories of manufacturing companies act as buffers so that operations can proceed smoothly even if suppliers are late %ith deliveries or a department is unable to operate for a brief period due to breakdo%ns or other reasons. b. the use of many suppliers so as to ensure rapid delivery of materials for production. c. the maintenance of a stock of ra% materials so that defective materials can be replaced :uickly so as to maintain a high rate of productivity. d. inventories are costly to carry and can be kept to minimum levels or eliminated completely %ith careful planning.
Managerial Accounting, 9/e
4
#2. 9 Easy
The 5ust in time 3*T concept applies to %hich of the follo%ing> *. The ac:uisition of ra% materials. **. The assembly of manufactured parts in products. ***. The shipment of finished products to customers. a. *. b. *, ***. c. *, **, ***. d. **, ***.
##. D Medium
The flo% of goods through a 3*T system is based on> a. a %orkstation efficiently completing its processing of a batch of units so that the units can proceed for%ard to the net %orkstation before the net %orkstation is ready to receive them. b. processing goods in large batch si!es rather than less economical small batches. c. maintaining a stockpile of ra% materials in anticipation of materials shortages. d. producing to meet customer demand %ith no buildup of inventory at any point in the production process.
#$. D Medium
0 successful 3*T system is based upon %hich of the follo%ing concepts= a. The company must rely upon a large number of suppliers to ensure fre:uent deliveries of small lots. b. The company should al%ays choose those suppliers offering the lo%est prices. c. The company should avoid long4term contracts %ith suppliers so as to eert pressure on suppliers to make prompt and fre:uent deliveries. d. 0 small number of suppliers make fre:uent deliveries of specific :uantities thus avoiding the buildup of large inventories of materials on hand.
#&. ? Medium
The plant layout under the 3 *T concept emphasi!es> a. a functional approach in %hich machines performing the same function are grouped together. b. a product approach in %hich all machines needed in the production of a particular product are grouped together. c. a facilities approach in %hich all machines of a similar nature are located in one plant building. d. a concentrated approach in %hich the processing of certain subassemblies is performed by a small number of independent machine shops under contract to the manufacturing company.
Managerial Accounting, 9/e
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#'. 9 Medium
The key point of a focused factory is that> a. the flo% line of a product must be straight. b. the flo% line of product must be A4shaped. c. all machines in a product flo% line are tightly grouped together so that partially4 completed units are not shifted from place to place all over the factory. d. products should be moved from one group of machines to another even if this involves movements across the plant or to another building so as to eploit fully the benefits of %orker speciali!ation.
#). ? Medium
0 company adopting the 3*T approach %ould> a. produce large batches of products so as to recoup the costs b. attempt to reduce setup time so as to economically produce c. adapt a functional plant layout so as to enhance production d. re:uire %orkers to become highly speciali!ed in operating a
#+. ? Medium
The (lan4Do49heck40ct 9ycle includes all of the follo%ing ecept> a. studying the current process. b. determining %hich manager is responsible for eisting problems. c. implementing a plan on a small scale if possible. d. analy!ing data to identify possible causes for any problems.
#-. 9 Easy
*n Total 8uality Management, problems are solved by teams consisting of> a. top managers. b. outside consultants and :uality control engineers. c. front4line %orkers. d. customers and sales representatives.
$. 9 Medium
$. 0 danger in (rocess 7eengineering is that> a. non4value4added activities may be eliminated. b. some resources may no longer be re:uired. c. employee morale may suffer. d. all of the above.
Managerial Accounting, 9/e
associated %ith setups. in smaller batches. fleibility. single machine.
6
$1. 9 Bard
The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management contains a policy regarding confidentiality that re:uires that management accountants> a. refrain from disclosing confidential information ac:uired in the course of their %ork ecept %hen authori!ed by management. b. refrain from disclosing confidential information ac:uired in the course of their %ork in all situations. c. refrain from disclosing confidential information ac:uired in the course of their %ork ecept %hen authori!ed by management, unless legally obligated to do so. d. refrain from disclosing confidential information ac:uired in the course of their %ork in all cases since the la% re:uires them to do so.
$2. 0 Medium
The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management states that significant ethical issues should be discussed first %ith an immediate superior unless the superior is involved. *f satisfactory resolution cannot be achieved %hen the problem is initially presented, then the issues should be> a. submitted to the net higher managerial level. b. submitted to the chief eecutive officer of the firm. c. submitted to the audit committee, eecutive committee, board of directors, or o%ners. d. submitted to outside legal counsel.
$#. ? Medium
0 traditional functional factory layout results in> a. minimal material handling. b. large %ork in process inventories. c. minimal throughput time. d. lo% storage costs.
$$. D Medium
0n eample of a performance report %ould be> a. an income statement reporting actual results for the past month. b. an income statement sho%ing the amounts budgeted for the past month. c. a balance sheet sho%ing the actual financial position at the end of the past month. d. a production report sho%ing budgeted and actual production for the past month.
Managerial Accounting, 9/e
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Essay $&. Medium
Cou have recently been hired by a manufacturing company. T%o days ago, you met %ith the top management of the your company to discuss future strategies for the firm. During the meeting the president of the company epressed concern about the profitability of the company and the company"s ability to compete effectively in the future. Cou responded to the president"s concerns by mentioning some articles you had read in professional accounting 5ournals regarding 3*T. The president responded to your comments by saying that although the 3*T concept sounded interesting, no one in the company %as kno%ledgeable about 3 *T. The president then re:uested that you prepare a brief summary of 3*T for the net strategic planning meeting. 7e:uired> a. ist the five key elements involved in the successful b. ist at least five benefits cited as coming from a 3*T
operation of a 3*T system. system.
0ns%er> a. The five key elements involved in the successful operation of 3*T system are> 1. 0 company must learn to rely on a fe% suppliers %ho are %illing to make fre:uent deliveries in small lots of defect4free material. 2. 0 company must improve the manufacturing flo% lines in its plants by physically locating together all of the machines needed in the production of a particular product. #. 0 company must reduce setup times by creating flo% lines that are dedicated to a single product so that production occurs in smaller batches resulting in reduced levels of %ork in process and finished goods inventories. $. 0 company must develop a system of total :uality control over its part and materials, such :uality being monitored by both suppliers and employees so as to avoid interruptions in production. &. 0 company must develop a fleible %ork force of multi4 skilled %orkers capable of operating the various machines in the manufacturing flo% lines as %ell as performing minor repairs and maintenance %ork %hen no demands are made by the net %ork station.
Managerial Accounting, 9/e
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b. 0 3*T system should produce the follo%ing benefits> 1. orker productivity is increased through teams %orking in a cellular plant layout organi!ed in product flo% lines. 2. ;etup time is decreased, resulting in smaller batch si!es and smoother flo% of goods bet%een %orkstations. #. Total production time is decreased, resulting in greater output and :uicker response to customer needs. $. aste is reduced as a result of implementation of a Total 8uality 9ontrol program. &. *nventories of all types are reduced through better control by suppliers, less %ait time bet%een %ork stations, smaller production runs, and the production of goods to customer orders. '. *nvestment funds previously tied up in inventories are released for use else%here in the company. ). Asable space in the plant is increased as areas previously used to store inventory are made available for other, more productive uses.
Managerial Accounting, 9/e
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