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Management Accounting 6th Canadian Edition Test Bank
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,Management Accounting, Cdn. 6e (Horngren/Sundem/Stratton/Beaulieu)Chapter 1 Management Accounting and Management Decisions
1) Both internal managers and external parties use accounting information.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 16
Objective: 8
2) Internal accounting reports must follow generally accepted accounting principles and account for
assets at historical cost.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 16
Objective: 8
3) Organizations that do not make or sell tangible goods are called service organizations.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 7
Objective: 3
4) The cost-benefit balance is the primary consideration in choosing among accounting systems and
methods.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 2
Objective: 3
5) Planning refers to setting objectives, implementing plans, and evaluating objectives.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 3
Objective: 2
6) A budget is a quantitative expression of a plan of action.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 2
Objective: 3
7) Management by exception involves a detailed analysis of all deviations from planned performance
regardless of the amount.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 2
Objective: 3
8) Sales growth occurs in the mature market stage of product life cycle.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 9
Objective: 4
1
© 2012 Pearson Canada Inc.
,9) Line authority is authority exerted downward over subordinates.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 12
Objective: 5
10) Line departments support or service staff departments.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 12
Objective: 5
11) According to the Financial Executives Institute, the controller's function is to obtain both short-term
and long-term loans.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 14
12) The CMA program focuses on management accounting and its role in Canadian business.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 16
Objective: 8
13) The factors causing changes in management accounting today include increased global competition,
technological advances and increased production by Canadian companies.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 16
Objective: 8
14) The essence of the just-in-time philosophy is to eliminate waste.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 16
Objective: 8
15) The Society of Management Accountants of Canada (SMAC) has developed standards of ethical
conduct for management accountants, which include standards of competence, confidentiality, integrity
and objectivity.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 20
Objective: 9
16) A survey of managers selected which of the following business areas as the most common starting-
point for future managers?
A) Accounting.
B) Finance.
C) Legal environment of business.
D) Computers in business.
Answer: A
Diff: 1 Type: MC Page Ref: 2
Objective: 1
17) Management accounting refers to accounting information developed for
A) shareholders.
B) governmental authorities.
C) managers within an organization.
D) loan officers.
Answer: C
Diff: 1 Type: MC Page Ref: 16
2
© 2012 Pearson Canada Inc.
, Objective: 8
18) ________ is a formal mechanism for gathering, organizing, and communicating information about an
organization's activities.
A) An accounting system
B) Scorekeeping
C) Management accounting
D) Attention directing
Answer: A
Diff: 1 Type: MC Page Ref: 3
Objective: 2
19) ________ refers to accounting information developed for users within an organization.
A) An accounting system
B) Scorekeeping
C) Management accounting
D) Financial accounting
Answer: C
Diff: 1 Type: MC Page Ref: 3
Objective: 2
20) ________ is the accumulation and classification of data.
A) An accounting system
B) Scorekeeping
C) Management accounting
D) Attention directing
Answer: B
Diff: 1 Type: MC Page Ref: 3
Objective: 2
21) ________ means reporting and interpreting information that helps managers to focus on operating
problems, imperfections, inefficiencies, and opportunities.
A) Scorekeeping
B) Attention directing
C) Problem-solving
D) None of the above
Answer: B
Diff: 1 Type: MC Page Ref: 3
Objective: 2
3
© 2012 Pearson Canada Inc.
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