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Student: ___________________________________________________________________________
1.
The value chain comprises activities from research and development through the production process, but
does not include activities related to the distribution of products or services.
True
2.
Administrative functions are not included in the value chain because they are implicitly included in every
business function.
True
3.
False
Budgeting is primarily used to determine year-end bonuses based on managerial and organizational
performance.
True
9.
False
It is important that the manager assigned to lead a responsibility center be held accountable for its
operations.
True
8.
False
A responsibility center can be a department, division, or segment, but not a subsidiary of the parent
company.
True
7.
False
A cost can be differential for one particular course of action and non-differential for another course of
action.
True
6.
False
5.
False
4.
False
False
Managers are responsible for the costs incurred to achieve the targets set during the budgeting process, but
not the resources consumed to achieve those targets.
True
False
10. Cost information used for one managerial decision could be irrelevant for another managerial decision.
True
False
11. Financial accounting information is designed for decision-makers who are directly involved in the daily
management of the firm.
True
False
12. It is more important for financial accounting information to be comparable between firms than to be useful
for managerial decision-making.
True
False
13. Cost accounting information developed for managers to use in making decisions must comply with
generally accepted accounting principles (GAAP).
True
False
14. Cost accounting information can be used by managers to defraud customers, creditors, and owners.
True
False
15. Benchmarking is an on-going process that compares a company's products or services with the best levels
of performance from other firms.
True
False
16. Activity-based costing (ABC) is a management tool that focuses on the continuous improvement of all
dimensions of a business.
True
False
False
18. Managers face ethical situations on a daily basis, while accountants face them infrequently.
True
False
19. A person who makes unethical decisions in their personal life is likely to make unethical decisions in their
professional life.
True
False
20. Ethical behavior depends more on a firm's code of conduct than the individual's personal beliefs.
True
False
21. The set of activities that transforms raw resources into the goods and services of an organization is called:
A.
B.
C.
D.
Value chain.
Supply chain.
Demand chain.
Cost-benefit analysis.
22. Which of the following activities would not be considered a value-added activity?
A.
B.
C.
D.
Production
Marketing
Accounting
Distribution
Product design
Customer service
Research and development
Rework of defective items
26. An accounting system that collects financial and operating data on the basis of the underlying nature and
extent of cost drivers is (CMA adapted)
A.
B.
C.
D.
full-absorption costing.
activity-based costing.
variable costing.
benchmarking.
28. The JKL Restaurant had sales revenues and food costs in 2009 of $800,000 and $600,000, respectively. In
2010, JKL will be introducing a new menu item that will generate $100,000 in sales revenues and $40,000
in food costs. Assuming no changes are expected for the other food items, the differential operating profit
for 2010 is
A.
B.
C.
D.
$260,000.
$100,000.
$60,000.
$40,000.
29. The process of creating a formal plan and translating goals into a quantitative format is (CMA adapted)
A. budgeting.
B. benchmarking.
C. cost-benefit analysis.
D. value-added analysis.
E. activity-based costing.
30. The field of accounting that depends on generally accepted accounting principles (GAAP) is called
A. cost accounting.
B. financial accounting.
C. managerial accounting.
D. responsibility accounting.
E. international accounting.
31. Which field of accounting emphasizes relevancy over comparability?
A.
B.
C.
D.
Cost accounting.
Financial accounting.
Responsibility accounting.
International accounting.
34. According to the Institute of Management Accountants (IMA), the final step in resolving an ethical
dilemma is to
A. resign from the organization.
B. call the IMA's ethics hotline.
C. report the circumstances to a local newspaper.
D. consult with an objective, independent advisor.
E. discuss the situation with an immediate supervisor.
35. According to the Institute of Management Accountants (IMA), the first step in resolving an ethical
dilemma is to
A. resign from the organization.
B. call the IMA's ethics hotline.
C. report the circumstances to a local newspaper.
D. consult with an objective, independent advisor.
E. discuss the situation with an immediate supervisor.
36. Which of the following is not one of the basic standards of the Institute of Management Accountants (IMA)
Code of Ethics?
A. Competence
B. Confidentiality
C. Honesty
D. Integrity
E. Credibility
37. Which of the following is not one of the overarching ethical principles of the Institute of Management
Accountants (IMA) Code of Ethics?
A. Competence
B. Responsibility
C. Honesty
D. Objectivity
E. Fairness
38. The financial plan of the revenues and resources needed to carry out activities and meet financial goals is
called
A. performance measure
B. benchmarking
C. budgeting
D. responsibility center
E. lean accounting
39. The cost accounting system that minimizes wasteful or unnecessary transaction processes is
A. performance measure
B. benchmarking
C. budgeting
D. responsibility center
E. lean accounting
40. Continual process of measuring a company's own products, services or activities against competitors'
performance is
A. performance measure
B. benchmarking
C. budgeting
D. responsibility center
E. lean accounting
41. The costing method that first assigns costs to activities and then assigns them to products based on the
products' consumption of activities is called
A. lean accounting
B. responsibility centers
C. activity-based costing
D. budgeting
E. outsourcing
42. Having one or more of the firms' activities performed by another firm or individual in the supply or
distribution chain is called
A. lean accounting
B. responsibility centers
C. activity-based costing
D. budgeting
E. outsourcing
43. The system that identifies the costs of producing low-quality items is called
A. customer relationship management
B. distribution chain
C. total quality management
D. cost of quality
E. enterprise resource planning
44. The system that allows firms to target profitable customers by assessing customer revenue and costs is
called
A. customer relationship management
B. distribution chain
C. total quality management
D. cost of quality
E. enterprise resource planning
45. Information technology that links the various processes of the company into a single comprehensive
information system is called
A. customer relationship management
B. distribution chain
C. total quality management
D. cost of quality
E. enterprise resource planning
46. A management method by which the organization seeks to excel on all dimensions of quality is called
A. customer relationship management
B. distribution chain
C. total quality management
D. cost of quality
E. enterprise resource planning
47. Which of the following is not a key financial manager in an organization?
A. Chief financial officer
B. Treasurer
C. External auditor
D. Controller
E. Cost accountant
48. Which of the following is not normally considered part of the value chain?
A. Research and development
B. Purchasing
C. Administration
D. Distribution
E. Customer service
49. In 2010, the Turnkey Company had consulting revenues of $1,000,000 while costs were $750,000. In 2011,
Turnkey will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in
costs. Assuming no changes are expected for the other services, the differential operating profit for 2011 is
A.
B.
C.
D.
$250,000.
$150,000.
$90,000.
$60,000.
50. In 2010, the MoreForLess Company had revenues of $2,000,000 while costs were $1,500,000. In 2011,
MoreForLess will be introducing a new product line that will generate $200,000 in sales revenues and
$160,000 in costs. Assuming no changes are expected for the other products, the differential operating
profit for 2011 is
A.
B.
C.
D.
$540,000.
$200,000.
$160,000.
$40,000.
cost-benefit analysis
value-added activity
activity-based cost
nonvalue-added activity
differential costs
cost-benefit analysis
activity-based costs
cost drivers
54. Northern King is an integrated provider of genetically engineered corn. Many types of costs are incurred in
its operations.
Required: For each cost in the following table, identify the stage in the value chain where the cost is
incurred.
55. Cindy's Limo Service provides transportation services in and around Middleville. Its profits have been
declining, and management is planning to add a package delivery service that is expected to increase
revenue by $275,000 per year. The total cost to lease additional delivery vehicles from the local dealer is
$60,000 per year. The present manager will continue to supervise all services. Due to expansion, however,
the labor costs and utilities would increase by 40%. Rent and other costs will increase by 15%.
Required:
Prepare a report of the differential costs and revenues if the delivery service is added. Should management
start up the delivery service? Explain your answer.
56. Looman Inc. is a management consulting firm that specializes in management training programs. In-Line
Mfg has approached Looman to contract for management training for a year period. Last year's income
statement for Looman is as follows:
To satisfy the In-Line contract, another part-time trainer will need to be hired at $42,000. Supplies will
increase by 12% and other costs by 15%. New equipment of $2,500 will need to be lease.
Required:
(a) What are the differential costs that would be incurred as a result of taking the In-Line contract?
(b) If In-Line will pay $55,000 for one year, should Looman accept the contract? Explain your answer.
57. The owner of a small retail business asks, "Why do I need cost accountants? My CPA produces financial
statements, which are sufficient for me to discover my costs. Look at my Income Statement. I expect sales
to increase by 10% next year, so I am planning on a 10% increase in profits. I don't need a cost accountant
to tell me that."
Required: Use your knowledge of the concept of differential costs and explain why a cost accountant would
question the conclusion that a 10% increase in sales would yield a 10% increase in profit.
58. Create a diagram of the value chain by putting the following components into the correct order: a)
purchasing; b) marketing and sales; c) research and development; d) customer service; e) distribution; f)
design; g) production.
59. Explain the difference between a value chain, a supply chain, and a distribution chain.
60. Compare financial accounting and cost accounting using the following concepts: users of the information;
important criteria; who establishes or defines the system; and how to determine an accounting treatment.
61. The IMA Code of Ethics describes three basic steps a cost accountant should take when faced with an
ethical conflict: Discuss, clarify, consult. Describe each of these three steps.
62. Respond to this comment: "Since cost accountants just prepare accounting data for internal management,
cost accountants do not need to be concerned with GAAP or IFRS."
ch1 Key
1.
The value chain comprises activities from research and development through the production process,
but does not include activities related to the distribution of products or services.
FALSE
distribution is included in the value chain
AACSB: Analytic
AICPA: BB-Industry
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #1
Learning Objective: 1
Topic Area: Value Chain
2.
Administrative functions are not included in the value chain because they are implicitly included in
every business function.
TRUE
administrative functions are a part of every business function rather than being separate
AACSB: Analytic
AICPA: BB-Industry
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #2
Learning Objective: 1
Topic Area: Value Chain
3.
4.
5.
A cost can be differential for one particular course of action and non-differential for another course of
action.
TRUE
the identification of a differential cost is dependent upon the context
AACSB: Analytic
AICPA: FN-Measurement
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #5
Learning Objective: 3
Topic Area: Costs for Decision Making
6.
A responsibility center can be a department, division, or segment, but not a subsidiary of the parent
company.
FALSE
a responsibility center can be any of these
AACSB: Analytic
AICPA: BB-Critical Thinking
Blooms: Comprehension
Difficulty: Medium
Lanen - Chapter 01 #6
Learning Objective: 3
Topic Area: Costs for Control and Evaluation
7.
It is important that the manager assigned to lead a responsibility center be held accountable for its
operations.
TRUE
responsibility does not work without accountability
AACSB: Analytic
AICPA: BB-Critical Thinking
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #7
Learning Objective: 3
Topic Area: Costs for Control and Evaluation
8.
Budgeting is primarily used to determine year-end bonuses based on managerial and organizational
performance.
FALSE
budgeting is used primarily for planning
AACSB: Analytic
AICPA: BB-Critical Thinking
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #8
Learning Objective: 3
Topic Area: Costs for Control and Evaluation
9.
Managers are responsible for the costs incurred to achieve the targets set during the budgeting process,
but not the resources consumed to achieve those targets.
FALSE
managers are held responsible for both costs and resources
AACSB: Analytic
AICPA: BB-Critical Thinking
Blooms: Comprehension
Difficulty: Medium
Lanen - Chapter 01 #9
Learning Objective: 3
Topic Area: Costs for Control and Evaluation
10.
Cost information used for one managerial decision could be irrelevant for another managerial decision.
TRUE
the identification of a differential cost is dependent upon the context
AACSB: Analytic
AICPA: FN-Measurement
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #10
Learning Objective: 3
Topic Area: Different Data for Different Decisions
11.
Financial accounting information is designed for decision-makers who are directly involved in the daily
management of the firm.
FALSE
financial accounting is designed for external parties; cost accounting is designed for managers
AACSB: Analytic
AICPA: BB-Critical Thinking
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #11
Learning Objective: 2
Topic Area: Financial Accounting
12.
It is more important for financial accounting information to be comparable between firms than to be
useful for managerial decision-making.
TRUE
financial accounting is used to compare across companies; cost accounting is used by managers
AACSB: Analytic
AICPA: FN-Reporting
Blooms: Comprehension
Difficulty: Hard
Lanen - Chapter 01 #12
Learning Objective: 2
Topic Area: Financial Accounting
13.
Cost accounting information developed for managers to use in making decisions must comply with
generally accepted accounting principles (GAAP).
FALSE
decision relevance is more important than GAAP
AACSB: Analytic
AICPA: FN-Measurement
Blooms: Comprehension
Difficulty: Medium
Lanen - Chapter 01 #13
Learning Objective: 2
Topic Area: Cost Accounting
14.
Cost accounting information can be used by managers to defraud customers, creditors, and owners.
TRUE
any accounting information can be used to defraud
AACSB: Analytic
AICPA: BB-Critical Thinking
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #14
Learning Objective: 2
Topic Area: Cost Accounting
15.
Benchmarking is an on-going process that compares a company's products or services with the best
levels of performance from other firms.
TRUE
this is the definition of benchmarking
AACSB: Analytic
AICPA: BB-Critical Thinking
Blooms: Knowledge
Difficulty: Easy
Lanen - Chapter 01 #15
Learning Objective: 4
Topic Area: Cost Accounting in Purchasing
16.
Activity-based costing (ABC) is a management tool that focuses on the continuous improvement of all
dimensions of a business.
FALSE
ABC focuses on the activities that cause costs
AACSB: Analytic
AICPA: FN-Measurement
Blooms: Knowledge
Difficulty: Easy
Lanen - Chapter 01 #16
Learning Objective: 4
Topic Area: Cost Accounting in Design
17.
18.
Managers face ethical situations on a daily basis, while accountants face them infrequently.
FALSE
accountants also frequently face ethical situations
AACSB: Ethics
AICPA: BB-Critical Thinking
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #18
Learning Objective: 5
Topic Area: What Makes Ethics So Important
19.
A person who makes unethical decisions in their personal life is likely to make unethical decisions in
their professional life.
TRUE
ethics are a result of an internal moral compass
AACSB: Ethics
AICPA: BB-Critical Thinking
Blooms: Application
Difficulty: Hard
Lanen - Chapter 01 #19
Learning Objective: 5
Topic Area: What Makes Ethics So Important
20.
Ethical behavior depends more on a firm's code of conduct than the individual's personal beliefs.
FALSE
ethics are the result of internal decisions rather than being imposed
AACSB: Ethics
AICPA: BB-Critical Thinking
Blooms: Comprehension
Difficulty: Medium
Lanen - Chapter 01 #20
Learning Objective: 5
Topic Area: What Makes Ethics So Important
21.
The set of activities that transforms raw resources into the goods and services of an organization is
called:
A.
B.
C.
D.
Value chain.
Supply chain.
Demand chain.
Cost-benefit analysis.
22.
Production
Marketing
Accounting
Distribution
23.
24.
Perfect information.
Estimated information.
Actual information.
Financial information.
Cost information.
25.
Product design
Customer service
Research and development
Rework of defective items
26.
An accounting system that collects financial and operating data on the basis of the underlying nature
and extent of cost drivers is (CMA adapted)
A.
B.
C.
D.
full-absorption costing.
activity-based costing.
variable costing.
benchmarking.
27.
28.
The JKL Restaurant had sales revenues and food costs in 2009 of $800,000 and $600,000, respectively.
In 2010, JKL will be introducing a new menu item that will generate $100,000 in sales revenues and
$40,000 in food costs. Assuming no changes are expected for the other food items, the differential
operating profit for 2010 is
A.
B.
C.
D.
$260,000.
$100,000.
$60,000.
$40,000.
29.
The process of creating a formal plan and translating goals into a quantitative format is (CMA adapted)
A.
B.
C.
D.
E.
budgeting.
benchmarking.
cost-benefit analysis.
value-added analysis.
activity-based costing.
30.
The field of accounting that depends on generally accepted accounting principles (GAAP) is called
A.
B.
C.
D.
E.
cost accounting.
financial accounting.
managerial accounting.
responsibility accounting.
international accounting.
cost, managerial, and responsibility accounting do not depend on GAAP, international accounting is
based on IFRS
AACSB: Analytic
AICPA: FN-Reporting
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #30
Learning Objective: 2
Topic Area: Cost Accounting, GAAP, and IFRS
31.
Cost accounting.
Financial accounting.
Responsibility accounting.
International accounting.
32.
the focus is on reducing inventories, the other items are all results or outcomes
AACSB: Analytic
AICPA: BB-Resource Management
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #32
Learning Objective: 4
Topic Area: Cost Accounting in Production
33.
The primary reason for adopting total quality management (TQM) is to achieve (CIA adapted)
A.
B.
C.
D.
E.
34.
According to the Institute of Management Accountants (IMA), the final step in resolving an ethical
dilemma is to
A.
B.
C.
D.
E.
resigning is a last step, the other four attempt to resolve the dilemma
AACSB: Ethics
AICPA: BB-Critical Thinking
Blooms: Knowledge
Difficulty: Medium
Lanen - Chapter 01 #34
Learning Objective: 5
Topic Area: IMA Code of Ethics
35.
According to the Institute of Management Accountants (IMA), the first step in resolving an ethical
dilemma is to
A.
B.
C.
D.
E.
36.
Which of the following is not one of the basic standards of the Institute of Management Accountants
(IMA) Code of Ethics?
A.
B.
C.
D.
E.
Competence
Confidentiality
Honesty
Integrity
Credibility
37.
Which of the following is not one of the overarching ethical principles of the Institute of Management
Accountants (IMA) Code of Ethics?
A.
B.
C.
D.
E.
Competence
Responsibility
Honesty
Objectivity
Fairness
38.
The financial plan of the revenues and resources needed to carry out activities and meet financial goals
is called
A.
B.
C.
D.
E.
performance measure
benchmarking
budgeting
responsibility center
lean accounting
39.
The cost accounting system that minimizes wasteful or unnecessary transaction processes is
A.
B.
C.
D.
E.
performance measure
benchmarking
budgeting
responsibility center
lean accounting
40.
Continual process of measuring a company's own products, services or activities against competitors'
performance is
A.
B.
C.
D.
E.
performance measure
benchmarking
budgeting
responsibility center
lean accounting
41.
The costing method that first assigns costs to activities and then assigns them to products based on the
products' consumption of activities is called
A.
B.
C.
D.
E.
lean accounting
responsibility centers
activity-based costing
budgeting
outsourcing
42.
Having one or more of the firms' activities performed by another firm or individual in the supply or
distribution chain is called
A.
B.
C.
D.
E.
lean accounting
responsibility centers
activity-based costing
budgeting
outsourcing
43.
The system that identifies the costs of producing low-quality items is called
A.
B.
C.
D.
E.
44.
The system that allows firms to target profitable customers by assessing customer revenue and costs is
called
A.
B.
C.
D.
E.
45.
Information technology that links the various processes of the company into a single comprehensive
information system is called
A.
B.
C.
D.
E.
46.
A management method by which the organization seeks to excel on all dimensions of quality is called
A.
B.
C.
D.
E.
47.
48.
Which of the following is not normally considered part of the value chain?
A.
B.
C.
D.
E.
49.
In 2010, the Turnkey Company had consulting revenues of $1,000,000 while costs were $750,000.
In 2011, Turnkey will be introducing a new service that will generate $150,000 in sales revenues and
$60,000 in costs. Assuming no changes are expected for the other services, the differential operating
profit for 2011 is
A.
B.
C.
D.
$250,000.
$150,000.
$90,000.
$60,000.
50.
In 2010, the MoreForLess Company had revenues of $2,000,000 while costs were $1,500,000. In 2011,
MoreForLess will be introducing a new product line that will generate $200,000 in sales revenues and
$160,000 in costs. Assuming no changes are expected for the other products, the differential operating
profit for 2011 is
A.
B.
C.
D.
$540,000.
$200,000.
$160,000.
$40,000.
51.
cost-benefit analysis
value-added activity
activity-based cost
nonvalue-added activity
52.
differential costs
cost-benefit analysis
activity-based costs
cost drivers
53.
AACSB: Analytic
AICPA: BB-Industry
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #53
Learning Objective: 1
Topic Area: Value Chain
54.
Northern King is an integrated provider of genetically engineered corn. Many types of costs are incurred
in its operations.
Required: For each cost in the following table, identify the stage in the value chain where the cost is
incurred.
AACSB: Analytic
AICPA: BB-Industry
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #54
Learning Objective: 1
Topic Area: Value Chain
55.
Cindy's Limo Service provides transportation services in and around Middleville. Its profits have been
declining, and management is planning to add a package delivery service that is expected to increase
revenue by $275,000 per year. The total cost to lease additional delivery vehicles from the local dealer
is $60,000 per year. The present manager will continue to supervise all services. Due to expansion,
however, the labor costs and utilities would increase by 40%. Rent and other costs will increase by 15%.
Required:
Prepare a report of the differential costs and revenues if the delivery service is added. Should
management start up the delivery service? Explain your answer.
b. The decision to expand and offer the delivery service results in differential profits of $55,000, so
it is profitable to expand. Note that only differential costs and revenues figured in the decision. The
manager's salary did not change, so it was not included.
AACSB: Analytic
AICPA: FN-Decision Making
Blooms: Analysis
Difficulty: Medium
Lanen - Chapter 01 #55
Learning Objective: 2
Topic Area: Costs for Decision Making
56.
Looman Inc. is a management consulting firm that specializes in management training programs. InLine Mfg has approached Looman to contract for management training for a year period. Last year's
income statement for Looman is as follows:
To satisfy the In-Line contract, another part-time trainer will need to be hired at $42,000. Supplies will
increase by 12% and other costs by 15%. New equipment of $2,500 will need to be lease.
Required:
(a) What are the differential costs that would be incurred as a result of taking the In-Line contract?
(b) If In-Line will pay $55,000 for one year, should Looman accept the contract? Explain your answer.
(b) Looman will make an additional $5,508 in profits if they accept the contract.
Differential revenues will exceed the differential costs (55,000 - 49,492 = 5,508)
AACSB: Analytic
AICPA: FN-Decision Making
Blooms: Analysis
Difficulty: Medium
Lanen - Chapter 01 #56
Learning Objective: 2
Topic Area: Costs for Decision Making
57.
The owner of a small retail business asks, "Why do I need cost accountants? My CPA produces financial
statements, which are sufficient for me to discover my costs. Look at my Income Statement. I expect
sales to increase by 10% next year, so I am planning on a 10% increase in profits. I don't need a cost
accountant to tell me that."
Required: Use your knowledge of the concept of differential costs and explain why a cost accountant
would question the conclusion that a 10% increase in sales would yield a 10% increase in profit.
The primary purpose of this exercise is to challenge students to think beyond the material presented
in the chapter and to write/justify their responses. Answers will vary in depth and breadth, but should
mention the change in costs may not be linear, some costs are certainly fixed and others are variable,
and the above changes are based on estimates of changes in the cost drivers.
AACSB: Analytic
AICPA: FN-Decision Making
Blooms: Analysis
Difficulty: Medium
Lanen - Chapter 01 #57
Learning Objective: 2
Topic Area: Costs for Decision Making
58.
Create a diagram of the value chain by putting the following components into the correct order: a)
purchasing; b) marketing and sales; c) research and development; d) customer service; e) distribution; f)
design; g) production.
c) research & development f) design a) purchasing g) production b) marketing and sales e)
distribution d) customer service
AACSB: Analytic
AICPA: BB-Industry
Blooms: Comprehension
Difficulty: Easy
Lanen - Chapter 01 #58
Learning Objective: 1
Topic Area: Value Chain
59.
Explain the difference between a value chain, a supply chain, and a distribution chain.
The value chain is the set of activities that expand the entire transformation process from raw resources
into goods or services purchased and consumed by the end users. The supply chain is the set of firms
and individuals that sells goods and services to a firm. The supply chain is an input for a firm. The
distribution chain is the set of firms or individuals that buy and distribute the goods from the firm. The
distribution chain is the output from a firm.
AACSB: Analytic
AICPA: BB-Industry
Blooms: Analysis
Difficulty: Medium
Lanen - Chapter 01 #59
Learning Objective: 1
Topic Area: Value Chain
60.
Compare financial accounting and cost accounting using the following concepts: users of the
information; important criteria; who establishes or defines the system; and how to determine an
accounting treatment.
AACSB: Analytic
AICPA: FN-Reporting
Blooms: Analysis
Difficulty: Medium
Lanen - Chapter 01 #60
Learning Objective: 2
Topic Area: Accounting Systems
61.
The IMA Code of Ethics describes three basic steps a cost accountant should take when faced with an
ethical conflict: Discuss, clarify, consult. Describe each of these three steps.
Discuss the conflict with your immediate supervisor or, if the immediate supervisor is involved, the next
level in authority.
Clarify the relevant issues and concepts by discussions with a disinterested party.
Consult with an attorney about your rights and obligations.
AACSB: Ethics
AICPA: FN-Decision Making
Blooms: Comprehension
Difficulty: Medium
Lanen - Chapter 01 #61
Learning Objective: 5
Topic Area: Ethics
62.
Respond to this comment: "Since cost accountants just prepare accounting data for internal
management, cost accountants do not need to be concerned with GAAP or IFRS."
Although internal accounting is concerned with decision relevance for managers, the cost accountant
still needs to be informed as to the GAAP/IFRS concepts regarding recording and measuring of costs.
AACSB: Analytic
AICPA: FN-Reporting
Blooms: Analysis
Difficulty: Medium
Lanen - Chapter 01 #62
Learning Objective: 2
Topic Area: Cost Accounting, GAAP, and IFRS
ch1 Summary
Category
AACSB: Analytic
AACSB: Ethics
AICPA: BB-Critical Thinking
AICPA: BB-Industry
AICPA: BB-Leveraging Technology
AICPA: BB-Marketing
AICPA: BB-Resource Management
AICPA: FN-Decision Making
AICPA: FN-Measurement
AICPA: FN-Reporting
Blooms: Analysis
Blooms: Application
Blooms: Comprehension
Blooms: Knowledge
Difficulty: Easy
Difficulty: Hard
Difficulty: Medium
Lanen - Chapter 01
Learning Objective: 1
Learning Objective: 2
Learning Objective: 3
Learning Objective: 4
Learning Objective: 5
Topic Area: Accounting Systems
Topic Area: Cost Accounting
Topic Area: Cost Accounting in Customer Service
Topic Area: Cost Accounting in Design
Topic Area: Cost Accounting in Distribution
Topic Area: Cost Accounting in Marketing
Topic Area: Cost Accounting in Production
Topic Area: Cost Accounting in Purchasing
Topic Area: Cost Accounting, GAAP, and IFRS
Topic Area: Costs for Control and Evaluation
Topic Area: Costs for Decision Making
Topic Area: Customers of Cost Accounting
Topic Area: Different Data for Different Decisions
Topic Area: Enterprise Resource Planning
Topic Area: Ethics
Topic Area: Financial Accounting
Topic Area: Finding and Eliminating Activities That Dont Add Value
Topic Area: IMA Code of Ethics
Topic Area: Key Financial Players in the Organization
Topic Area: Value Chain
Topic Area: What Makes Ethics So Important
# of Questions
54
8
15
11
1
1
13
4
12
5
6
4
38
14
30
3
29
62
13
17
10
14
8
1
2
4
2
1
1
2
2
3
6
11
1
1
1
1
2
2
4
1
11
3