60 Test Bank for Managerial Accounting 1st .
Edition by Balakrishnan Multiple Choice Questions Page 1
The value of an option equals its:
1.

A. Benefits plus its costs.

2.

B. Benefits less its costs.

3.

C. Costs.

4.

D. Profit.

5.

E. None of the above.

Managerial accounting is a branch of accounting which:
1.

A. Provides financial information to creditors and stockholders.

2.

B. Summarizes financial information.

Monitoring to enforce policies and procedures might include:
1.

A. Perform random drug and alcohol tests on employees.

2.

B. Routinely walk around and make sure employees are doing their jobs.


3.

C. Keep attendance records to discourage employees from claiming payment
for time not worked.

4.

D. Both A and B.

5.

E. A, B and C are methods of monitoring.

In applying the four-step decision-making framework, which of the
following is a difference in individuals’ and organizations’ decision
making process?
1.

A. Individuals’ goals might have several factors whereas organizations tend to
have focused goals.


4.

D. For most businesses, identifying the set of options is one of the more
important tasks of management.

5.

E. Value is the contribution of an option to the decision maker’s goals.

Groceries R Us is considering two different options: install four selfservice registers which would increase profits by $1,800, or install 2
additional full-service registers which would increase profits by
$400. What is the value and opportunity cost of the option of
installing the full-service registers?


1.

Value Opportunity Cost

2.

A. $1,800 $1,800

3.

B. $400 $1,800

4.


2.

B. Estimating the time value of money.

3.

C. Trading off what the decision maker gets with what the decision maker
gives up.

4.

D. Comparing the current period’s opportunity costs with the previous period’s
opportunity costs.

5.

E. None of the above.

Which of the following is the best example of an opportunity cost?
1.

A. The cost of filling up the company car with gasoline.

2.

B. The time incurred in reviewing expense reports of key employees in the
company.

3.


The proper order for the steps in a planning and control cycle are:
1.

A. Plan, revise, implement, and evaluate.

2.

B. Implement, evaluate, revise, and plan.

3.

C. Implement, revise, evaluate, and plan.

4.

D. Plan, implement, evaluate, and revise.

Which of the following is not associated with how organizations
motivate employees to achieve their goals?
1.

A. Policies and procedures.

2.

B. Incentive schemes and performance evaluation.

3.

C. Terminating employees.


A. Step 1: Specify the decision problem.

2.

B. Step 2: Identify options.

3.

C. Step 3: Measure benefits and costs.

4.

D. Step 4: Make the decision.

John has three options for summer work. He can do lawn work for
$100 per week, babysit for $125 per week, or work at the local pool
for $175 per week. All of the options would require approximately
20 hours of work per week. In addition, if he chooses to work at the
pool, he will incur $20 in gas costs per week. The opportunity cost if
he chooses to babysit is:
1.

A. $100

2.

B. $175

3.

transportation.

In the planning and control cycle, the Revise stage deals with:
1.

A. Best mix of products and services.

2.

B. Reasons for deviations.

3.

C. Motivate employees.

4.

D. Customer and prices.

5.

E. None of the above is a part of the Revise stage.

Which of the following is not a stage in the planning and control
cycle?
1.

A. Implementing.

2.

D. Actual results.

5.

E. Reasons for deviations.

In the planning and control cycle, the Evaluate stage deals with:
1.

A. Products and services.

2.

B. Resources necessary.


3.

C. Set performance targets.

4.

D. Achievement of performance targets.

5.

E. All of he above are part of the Evaluate stage.

In order to make a good decisions, management must rely on:
1.

4.

C. Increase employee incentives for exceptional work.
D. Decrease the amount of supervision of the employees, as this can be
distracting to employees.

Which of the following is something owners might do to influence
employees to achieve organizational goals?
1.

A. Maintain policies and procedures to define acceptable behavior.

2.

B. Have incentive schemes and performance evaluations to motivate
employees to consider organizational goals.

3.

C. Monitor to enforce policies and procedures.

4.

D. Both A and B.

5.

E. A, B and C are things owners might do.




C. Reducing opportunity cost to a minimum.

4.

D. Tailoring policies and procedures to fit the organization’s specific needs.

5.

E. None of the above promotes goal congruence.

What is the first step in the decision-making process?
1.

A. Identify available options.

2.

B. Specify the problem and goals.

3.

C. Measure costs and benefits.

4.

D. Make a final decision.

In the planning and control cycle, the Plan stage deals with:
1.

3.

C. Separate routine decision problems from non-routine decision problems.

4.

D. Measure benefits and costs to determine the value of each option.

5.

E. Make the decision, choosing the option with the highest value.

60 Free Test Bank for Managerial Accounting 1st Edition
by Balakrishnan Multiple Choice Questions - Page 2
Which of the following is not a correct statement regarding the
Institute of Management Accountants (IMA)?
1.

A. Provides personal and professional development opportunities in
information management.

2.

B. Offers educational programs to further the practice of management
accounting.

3.

C. Provides members with resources, information and leadership that enable
them to provide valuable services in the highest professional manner to benefit

2.

A. Manages the firm’s cash flow.
B. A key player in ensuring that the firm has appropriate monitoring,
performance evaluation, and incentive systems in place to motivate employees
to achieve organizational goals.

3.

C. Has a “dotted line” to the Board of Directors.

4.

D. Both A and B.

5.

E. A, B and C.

Christina Lee is a managerial accountant for The GreatStone
Manufacturing Company. She discovered that some of the
members of the sales department were inflating their expense
reports in order to receive more money from the company.
According to the Institute of Management Accountants’ Code of
Ethics Christina should:
1.

A. Notify the company’s chief executive officer.

2.

unethical decision making?
1.

A. Governments.


2.

B. Societies.

3.

C. Laws.

4.

D. Organizations.

5.

E. All of the above.

Which of the following is not an example of how companies provide
guidance regarding ethical standards?
1.

A. A company may mandate stiff penalties, including fines and jail time, for
unethical conduct.

2.


C. It provides for penalties, including fines and jail time, for executives who
knowingly alter, destroy, conceal or falsify records.

4.

D. It prohibits managers from giving or taking bribes, even if such acts are
part of the normal business practices in another country.

5.

E. All of the above are provisions of the Sarbanes-Oxley Act of 2002.

The standards of ethical conduct for members of the IMA include
standards relating to:
1.

A. Competence.


2.

B. Confidentiality.

3.

C. Integrity.

4.


E. Financial accounting reports are released periodically while managerial
accounting reports are generated on an as-needed basis.

Which of the following is not a correct statement regarding the
Institute of Internal Auditors (IIA)?
1.

A. Offers a certification that designates an accounting professional as
Certified Financial Manager.

2.

B. Advocates the value of internal auditing.

3.

C. Provides education on best practices in internal auditing.

4.

D. Provides leadership for the global professional of internal auditing.

5.

E. All of the above are correct statements regarding the IIA.

Which of the following is not an integrity requirement as stated by
the IMA Standards of Ethical Conduct for Members?
1.



B. Maintain employee pay records.

3.

C. Measure the costs and benefits of decision options.

4.

D. Prepare reports for the government.

5.

E. None of the above.

Which one of the following is a characteristic of managerial
accounting?
1.

A. Involves only quantitative information.

2.

B. Involves decision makers internal to the company.

3.

C. Prepared based on fixed periods of reporting.

4.


2.

B. Which products and services to offer.

3.

C. The prices of products and services.

4.

D. What equipment to purchase.

5.

E. All of the above.

A company’s Chief Executive Officer (CEO) reports to:
1.

A. The company’s Board of Directors.

2.

B. The company’s Chief Operating Officer.

3.

C. The company’s internal auditors.


Which law mandates that the financial statements of the
organization are accurate and complete when filed with the
Securities and Exchange Commission?
1.

A. The Foreign Corrupt Practices Act.


2.

B. The Financial Accountability Act.

3.

C. Generally Accepted Accounting Principles.

4.

D. The Sarbanes-Oxley Act.

Which of the following organizations advocates on behalf of its
members before the government and standard setters?
1.

A. AICPA.

2.

B. IMA.


Which one of the following is considered a stage of the planning
and control cycle?
1.

A. Analyze markets.

2.

B. Revise.

3.

C. Develop budgets.

4.

D. Modify.

According to the IMA Code of Ethics, to determine whether a
decision is good or bad:
1.

A. The decision-maker must compare his/her options with some standard of
perfection.


2.

B. The decision-maker must assess the situation and the values of the parties
affected by the decision.


5.

E. Board of Directors.

Which of the following is not a competence requirement as stated
by the IMA Standards of Ethical Conduct for Members?
1.

A. Maintain an appropriate level of professional competence by ongoing
development of their knowledge and skills.

2.

B. Refrain from engaging in or supporting any activity that would discredit their
profession.

3.

C. Perform their professional duties in accordance with relevant laws,
regulations, and technical standards.

4.

D. Prepare complete and clear reports and recommendations after
appropriate analysis of relevant and reliable information.

5.

E. All of the above are competence requirements.

2.

B. Publicly-traded companies release financial statements on a quarterly
basis.

3.

C. Publicly-traded companies notify stockholders if there is any turnover in
executive positions.

4.

D. Publicly-traded companies provide a dividend to stockholders at least
every other year.

Ethical standards are often considered difficult to enforce. Which
one of the following is a good approach to ensuring ethics are
followed?
1.

A. Randomly inquiring of certain employees whether they are being ethical or
not.

2.

B. Routinely check to ensure that applicants make truthful statement on their
employment applications.

3.


5.

E. “Will the personal benefits outweigh the costs of my decision?” and “Have I
considered all the consequences of my decision?”

The position of Treasurer typically includes the following
responsibilities except:
1.

A. Managing daily cash flow needs.

2.

B. Ensuring that capital is used wisely.

3.

C. Serving as the company’s liaison with creditors, particularly banks.

4.

D. Ensuring that the financial statements are presented fairly and are in
compliance with Generally Accepted Accounting Principals (GAAP).

Which of the following is not a provision of The Foreign Corrupt
Practices Act of 1977?
1.

A. It prohibits managers from giving bribes to foreign officials.