Management Advisory Services Objectives, Role & Scope of Management Accounting
Management Advisory Services Objectives, Role & Scope of Management Accounting
Management Advisory Services Objectives, Role & Scope of Management Accounting
Cost accounting acts as a bridge between financial accounting and management accounting. It addresses
both financial and management accounting by providing product cost information to both internal and
external parties responsible for planning, controlling, decision making, and evaluating performance.
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1. To provide information for costing services, products, and other objects of interest to management.
2. To provide information for planning, controlling, evaluation, and continuous improvement.
3. To provide information for decision making.
Management Process
Line Function
Is one that relates directly to the carrying out of the basic objectives of an organization. Line function has the
authority to command, act or decide in matters affecting others
Staff Function
Is supportive in nature, providing services and assistance to other parts of the organization
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The controller has line authority in his own department and performs staff function in the entire organization
MULTIPLE CHOICE
1. Which of the following is true of Managerial Accounting?
a. Complies with Securities and Exchange Commission rules and regulations.
b. Uses cost-benefit analysis to determine the amount of detail presented.
c. Prepares general-purpose reports for people outside an organization.
d. Presents summary historical data in compliance with generally accepted accounting principles.
2. Considering the time dimension, how does managerial decision making compare with external performance
evaluation?
Managerial Decision Making External Performance
a. Past Past
b. Past Future
c. Future Past
d. Future Future
5. In order to be useful to managers, management accounting reports should possess all of the following
characteristics except:
a. provide objective measures of past operations and subjective estimates about future decisions
b. be prepared in accordance with generally accepted accounting principles
c. be provided at any time management needs information
d. be prepared to report information for any unit of the business to support decision making
9. Financial accounting statements must be prepared in accordance with generally accepted accounting
principles. Managers of the company
a. Are required to follow GAAP as they utilize accounting information in their decisions.
b. Can disregard GAAP only for non-financial accounting data.
c. Can set their own ground rules on the form and content of information which is to be used internally.
d. Can set their own ground rules on the form and content of information which is to be used internally and
externally to the firm.
10. Managerial accounting differs from financial accounting in that managerial accounting:
a. Is internal and future oriented and governed by generally accepted accounting principles, whereas financial
accounting is not.
b. Is future oriented and focuses on the organization as a whole, whereas financial accounting is not.
c. Emphasizes relevant and flexible information whereas financial accounting does not.
d. Emphasizes relevant historical information about the whole firm, whereas financial accounting does not.
11. A management tool whose purpose is to show the relationship of one manager’s responsibilities to another’s is
a. An outline of the planning and control cycle.
b. The organization chart.
c. The budget.
d. The performance report
e. An evaluation of the difference between plans and actual performance.
13. An organization chart is an arrangement of boxes, which depicts the structure of an organization. This chart
does all of the following except:
a. depict the informal structure that may exist in an organization
b. show how responsibility has been divided between managers
c. show the formal lines of reporting and communication
d. depict line and staff authority in an organization
14. Essentially, the manager carries out five broad functions in the organization. Which of the following is not one
of those functions?
a. Accounting b. Planning c. Decision-making
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d. Controlling e. Motivating
15. Obtaining feedback on how well an organization is moving toward its objectives essential to the function of:
a. staffing c. controlling
b. organizing d. decision making
17. Which of the following positions would least likely be a staff position?
a. controller for a manufacturer
b. lawyer for a manufacturer
c. accountant in the accounting department of a public utility
d. vice president in charge of sales for a computer manufacturer
18. Ensuring that the organization operates in the intended manner and achieves its goals is known as:
a. decision making c. directing operations
b. planning d. controlling
19. Which of the following is the development of a detailed financial and operational description of anticipated
operations?
a. decision making c. directing operations
b. planning d. controlling
20. Which of the following refers to running the organization on a day-to-day basis?
a. decision making c. directing operations
b. planning d. controlling
21. Strategic planning, as practiced by most modern organizations, includes all of the following except:
a. top-level management participation.
b. a long-term focus.
c. strategies that will help in achieving long-range goals.
d. analysis of the current month’s actual variances from budget.
e. identification of long-term key variables including external influences
22. The chief management accountant called “controller” traditionally performs these functions except:
a. The establishment and implementation of the financial planning process
b. Financial and management reporting and interpretation
c. Protection of company resources and economic evaluation
d. Preparation of proposals for product promotion
23. It attempts to satisfy costing objectives for both financial and management accounting.
a. internal auditing c. accounting system
b. cost accounting d. responsibility accounting
26. One of the current themes of management accounting is to produce more accurate product costs. Which of
the following improves the accuracy of assigning costs by first tracing costs to activities and then to products
or customers that consume these activities?
a. process value analysis c. activity-based costing
b. strategic cost management d. activity-based management
28. The linked set of activities that increases the usefulness (or value) of the products or services of an
organization is the
a. direct chain. c. value chain.
b. indirect chain. d. variable chain.
29. ________ is the generation of, and experimentation with, ideas related to new products, services, or processes.
a. Research and development c. Production
b. Design of products, services, or processes d. Marketing
30. ________ is the detailed planning and engineering of products, services, or processes.
a. Distribution
b. Design of products, services, or processes
c. Production
d. Marketing
31. ________ is the acquisition, coordination, and assembly of resources to produce a product or deliver a service.
a. Research and development c. Production
b. Customer service d. Marketing
32. ________ is the manner by which companies promote and sell their products or services to customers or
perspective customers.
a. Distribution c. Research and development
b. Customer service d. Marketing
35. ________ describes the flow of goods, services, and information from the initial sources of materials and
services to the delivery of products to consumers, regardless of whether those activities occur in the same
organization or in other organizations.
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a. The value chain
b. The supply chain
c. Product differentiation
d. Distribution
36. Processing orders and shipping products or services to customers (also called outbound logistics) is also known
as
a. customer focus
b. distribution
c. Marketing
d. supply chain
37. What is the study of the need for activities and whether they are operating efficiently called?
a. direct and indirect cost management. c. activity-based management.
b. variable and fixed cost management. d. total quality management.
38. Which of the following describes an activity that increases the product’s service to the customer?
a. direct activity. c. value-added activity.
b. variable activity. d. non-value-added activity.
39. Which of the following is an activity that when eliminated reduces cost without reducing the product’s service
to the customer?
a. direct activity. c. value-added activity.
b. indirect activity. d. non-value-added activity.
40. According to the theory of constraints, improvement efforts should usually be focused on:
a. work centers that are not constraints.
b. the work center with the highest total cost.
c. the work center that is the constraint.
d. d. the work center with the most obsolete equipment.
43. Which of the following is not true about total quality management (TQM)?
a. The focus is on serving customers
b. Benchmarking is a tool used in TQM
c. Plan-Do-Check-Act-Cycle (PDCA) is a problem solving tool used in TQM
d. TQM is narrowly used because of its vulnerability to change
e. TQM avoids counterproductive organizational infighting
44. What management technique focuses on increasing quality as perceived and defined by the customer?
a. Theory of constraints. c. Total quality management.
b. Benchmarking. d. Web hosting.
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46. The benefits of a just-in-time system usually include which of the following?
a. elimination of non-value-added activities.
b. increase in inventory levels, thus guarding against stock-outs.
c. increased time spent valuating inventories.
d. decrease in the number of deliveries required to maintain production.
47. What production methodology strives to eliminate inventory and increase efficiency and quality?
a. Total quality management. c. Benchmarking.
b. Theory of constraints. d. Just-in-time.
49. A firm that is using a _____________________ strategy is attempting to create a perception of uniqueness that
will permit a higher selling price.
a. Value chain c. Lead time
b. Lowest cost d. Differentiation
50. The need for the cost accountant to understand the many functions of the business's value chain from marketing,
to manufacture, to customer service, has created the need for:
a. accountants to adopt a global perspective.
b. accountants to adopt a cross-functional perspective.
c. accountants to adopt a customer perspective.
d. accountants to adopt a technological perspective.