Module 1 – Introduction
Revision materials
TRUE/FALSE
1. A good cost accounting system is narrowly focused on a continuous reduction of costs.
2. Financial accounting is broader in scope than management accounting.
3. The best-designed strategies are valuable whether or not they are effectively implemented.
4. Financial accounting reports financial and nonfinancial information that helps managers
implement company strategies.
5. Management accounting is playing an increasingly important role by helping managers
develop and implement strategy.
6. Value chain refers to its value to the employee.
7. When a particular aspect of employee performance is measured, employees pay more
attention to it.
MULTIPLE CHOICE
1. Management accounting
a. focuses on estimating future revenues, costs, and other measures to forecast
activities and their results.
b. provides information about the company as a whole.
c. reports information that has occurred in the past that is verifiable and reliable.
d. provides information that is generally available only on a quarterly or annual
basis.
2. Which of the following descriptors refers to management accounting information?
a. It is verifiable and reliable.
b. It is driven by rules.
c. It is prepared for shareholders.
d. It provides reasonable and timely estimates.
3. Which of the following types of information are used in management accounting?
a. Financial information
b. Nonfinancial information
c. Information focused on the long term
d. All of the above
4. Cost accounting provides all EXCEPT
a. information for management accounting and financial accounting.
b. pricing information from marketing studies.
c. financial information regarding the cost of acquiring resources.
d. nonfinancial information regarding the cost of operational efficiencies.
5. Which of the following is NOT a function of a management accounting system?
a. Budget preparation
b. Financial reporting
c. Operational control
d. Product and customer costing
6. Strategy is formulated by answering all of the following EXCEPT
a. Who are our most important customers?
b. Is industry demand growing or shrinking?
c. How can we continue to reduce production costs?
d. How sensitive are purchasers to price, quality, and service?
7. In designing strategy, a company must match the opportunities and threats in the
marketplace with
a. those of the CFO (Chief Financial Officer).
b. its resources and capabilities.
c. branding opportunities.
d. capabilities of current suppliers.
8. Whose perceptions of the company's products or services are the most important to the
manager?
a. Board of directors' perception
b. Customers' perception
c. President's perception
d. Stockholders' perception
9. To be successful, a company needs to be
a. customer driven.
b. "driven" by the board of directors.
c. employee driven.
d. management driven.
10. Financial accounting provides a historical perspective, whereas management accounting
emphasizes
a. the future.
b. past transactions.
c. a current perspective.
d. reports to shareholders.
Solutions
True/False
1. Answer: False
A good cost accounting system is broadly focused to provide information that helps
managers at all levels implement, monitor, and evaluate company strategies.
2. Answer: False
Management accounting is broader in scope than financial accounting.
3. Answer: False
Implementation is essential or the strategy is useless.
4. Answer: False
Management accounting reports financial and nonfinancial information that helps
managers implement company strategies.
5. Answer: True
6. Answer: False
Value chain refers to its value to the customer.
7. Answer: True
MCQs
1. A
2. D
3. D
4. B
5. B
6. C
7. B
8. B
9. A
10. A
