MANAGEMENT ACCOUNTING, PURPOSE, DEFINITION AND SCOPE

1. Internal reports prepared under the responsibility accounting approach should be limited to
which of the following costs?
a. Only variable costs of production
b. Only conversion costs
c. Only controllable costs
d. Only costs properly allocable to the cost center under generally accepted accounting
principles
C
2. Which of the following items of costs is least likely to appear in a performance report based on
responsibility accounting techniques for the supervisor of an assembly line in a large
manufacturing situation?
a. Supervisors salary
b. Repairs and maintenance
c. Materials
d. Direct labor
A
3. Measuring the net income of an enterprise segment
a. Avoids arbitrary cost allocation
b. Involves consideration of more than the controllable and traceable items
c. Is identical to measuring its activity (traceable items only)
d. Is identical to measuring the performance of its manager
B
4. The cost most relevant that should be assigned to a responsibility center is the degree of
a. Avoid ability
b. Causality
c. Controllability
d. Variability
C
5. Which department is customarily held responsible for an unfavorable materials usage variance?
a. Quality control
b. Purchasing
c. Engineering
d. Production
D

6. Which of the following statements best describes a characteristic of a factory-overhead control

report prepared for use by a production line department head?
a. It is more important that the report be precise than timely
 b. The report should include information on all costs chargeable to the department, regardless
of their origin or control
c. The report should be stated in pesos rather than in physical units so the department head
knows the financial magnitude of any variances
d. The cost in the report should include only those controllable by the department head
D
7. A management decision may be beneficial for a given profit center, but not for the entire
company. From the overall company viewpoint, this decision could lead to action referred to as
a. Sub-optimization
b. Centralization
c. Goal congruence
d. Maximization
A
8. Controllable cost for responsibility accounting purposes are those costs that are directly
influenced by
a. A given manager within a given period of time
b. A change in activity
c. Production volume
d. Sales volume
A
9. The concept of Management by exception refers to managements
a. Consideration of only those items, which vary materially from plans
b. Consideration of only rate events
c. Consideration of items selected at random
d. Lack of predetermined plan
A
10. Of little or no relevance in evaluating the performance of an activity would be
a. Flexible budgets for mixed costs
b. Fixed budgets for mixed costs
c. The difference between planned and actual results
d. The planning and control of future events
B

11. One of the pre-requisites for a responsibility accounting system is an organizational chart and
also include the following except
a. A defined budget
b. A system of review
c. Variance Analysis
d. Personnel relations
D
12. Performance reports should include the following characteristic except
a. Reports should be addressed to the proper individuals
 b. Reports should be prompt and timely
c. Reports should be consistent in formal and content from period to period
d. Reports should include controllable and uncontrollable costs
D
13. Which of the following is not a distinction management accounting and financial accounting?
a. Management accounting generates special purpose reports while financial accounting
generates general-purpose statements
b. Management accounting emphasizes on objective data while financial accounting allows
subjective data
c. Management accounting information is directed to internal management while financial
accounting information is primarily intended to external users
d. Financial accounting must conform to generally accepted accounting principles which are
not imposed in management accounting
B
14. The focus of control shifts from a detailed analysis of revenues and expenses to the evaluation of
the net results is referred to as
a. Profit center
b. Revenue center
c. Cost center
d. Investment center
A
15. A few of the functions of the treasurer are: a) provision of capital; b) investor relations; c) short
term financing; d) banking and custody. Some of the functions of the controller include the
following except
a. Planning for control
b. Reporting and Interpreting
c. Credit and collection
d. Tax administration
C

16. A profit center is any sub unit or segment of an organization that is assigned
a. Both revenues and expenses
b. Revenues only
c. Expenses only
d. Variable expenses only
A
17. A responsibility center is an organization unit headed by a responsible manager. It can be a/or
a. Profit center
b. Revenue center
c. Investment center
d. All of the above
D
18. This involves the establishment of goals and the selection of courses of action to achieve those
goals
a. Control
b. Co-ordination
c. Planning
d. Cost accounting system
C
19. It is concerned with providing information to management that will be useful in making
decisions about the operations of the business
a. Responsibility accounting
b. Management accounting
c. Tax Accounting
d. Cost accounting
B
20. The primary objective of cost and managerial accounting is to assist which of the following in the
planning and control functions?
a. Management
b. Creditors
c. Stockholders
d. Government
A
21. The following standards of ethical conduct should be adhered to achieved the objectives of
management accounting except
a. Competence
b. Confidentiality
c. Client Benefit
d. Integrity and Objectivity
C

22. Which of the following is not primarily identified with management accounting?
a. Draws heavily form other disciplines such as economics and statistics
b. Provides financial information to internal managers
c. Focus on relevant and flexible data
d. Preparation of financial statements
D
23. The following are primarily identified with financial accounting except
a. Emphasizes the past rather than future
b. Is built around the fundamental accounting equation of debits and credits
c. Is not required by law
d. Focuses on the segments as well as the entire organization
D
24. From the pairs indicated, a to d, the first individual is related to the second individual by line
authority except
a. Controller; Internal Auditor
b. Treasure; Controller
c. Production Supervisor; Foreman
 d. VP- Finance; Treasurer
B
25. From the pairs indicated, a to d, the first individual is related to the second individual by staff
authority except
a. Controller; Assistant Controller
b. VP-Finance; Personnel Director
c. Treasurer; Controller
d. Controller; VP- Production
A
26. Management accounting is used by an organizations management for a multitude of purposes
that do not include
a. Marketing
b. Control
c. Evaluation
d. Reporting
A
27. Management Accounting differs from financial accounting in that financial accounting
a. More oriented towards future
b. Primarily concerned with external financial reporting
c. Concerned with non-quantitative information
d. Heavily involved with decision analyses and implementation of decisions
B

28. Management should implement a different and / or more expensive accounting system only
when
a. The cost of the system exceeds the benefits
b. Management thinks it is appropriate
c. The board of directors dictates a change
d. The benefits of the system exceed the cost
D
29. Controllers are ordinarily not concerned with
a. Preparation of tax returns
b. Reporting to government
c. Protection of assets
d. Investor relations
D
30. The treasury function is usually not concerned with
a. Financial reporting
b. Short term financing
c. Cash custody and banking
d. Credit extension and collection of bad debts
A