305 Financial Chapter 1 (Part 2)
Staff management includes:
human-resource managers
Which item is an indication of integrity under the Standards of Ethical Conduct?
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
The process of preparing a budget forces coordination and communication throughout the company.
TRUE
Treasury includes banking and short- and long-term financing, investments, and cash management
TRUE
When a particular aspect of employee performance is measured, employees pay more attention to it.
TRUE
When faced with a potential ethical conflict, the managerial accountant should first consult any internal procedures of that organization.
TRUE
Which of the following issues is NOT addressed by the Sarbanes-Oxley legislation?
disclosure practices of private companie
A bottleneck occurs when the work to be performed exceeds the available capacity.
TRUE
A budget is a quantitative expression of a plan.
TRUE
A cost concept used for external reporting purposes may not be appropriate for internal, routine reporting to managers.
TRUE
A managerial accountant should NOT disclose confidential information to an outside party (such as a newspaper) unless legally obligated to do so
TRUE
A performance report compares actual performance to the amount budgeted.
TRUE
Control includes deciding what feedback to provide that will help with future decision making
TRUE
Feedback and learning helps in the future decision-making process
TRUE
If a managerial accountant were NOT keeping up with current developments in managerial accounting, that behavior might violate a competence standard of professional ethical behavior.
TRUE
Increased global competition is placing pressure on companies to reduce cost
TRUE
Integrity includes mitigating actual conflicts of interest, regularly communicating with business associates to avoid apparent conflicts of interest, and advising all parties of any potential conflicts.
TRUE
It is difficult to control activities without a budget.
TRUE
Line management is directly responsible for attaining the goals of the organization.
TRUE
Management accountants have important ethical responsibilities that are related to competence, confidentiality, integrity, and credibility.
TRUE
Management accountants must have behavioral and interpersonal skills
TRUE
Management accounting is playing an increasingly important role by helping managers develop and implement strategy
TRUE
One of the steps in planning is making predictions about the future.
TRUE
The Institute of Management Accountants provides a hotline to discuss ethical issues
TRUE
The controller (also called the chief accounting officer) is the financial executive primarily responsible for both management accounting and financial accounting
TRUE
The controller is generally a staff position
TRUE
The controller is usually responsible for banking, short- and long-term financing, investments, and cash management.
TRUE
The increasing pace of technological innovation has resulted in shorter product life cycles.
TRUE
You have been employed as an entry-level management accountant for a little under a year. You suspect that your immediate supervisor is involved in a significant fraud involving diverting of company assets to personal use. Briefly describe the steps you might take to resolve this dilemma.
The management accountant should first consult any internal company procedures concerning the resolution of ethical issues, and make sure these procedures are followed as closely as possible. At the same time, the management accountant should make sure that the facts are accurate, and are not based on rumors or inaccurate information. If these policies do not resolve the situation, present the facts to the next higher managerial level. Clarify the relevant ethical issues with an objective advisor (e.g., Institute of Management Accountants hotline). Consult your own attorney to be aware of your own rights and responsibilities. If all internal review procedures have still not resolved the ethical situation, the managerial accountant might have to resign and write an informative letter to an appropriate representative of the organization, and perhaps notify other parties.
Which of the following statements concerning performance reports is NOT correct
The performance report contains no actual results due to confidentiality.
What areas of responsibility does a chief financial officer have in a typical organization?
The responsibilities vary among organizations, but generally include the following areas: controllership, treasury, risk management, taxation, investor relations, and internal audit.
A budget can serve as:
a planning and control tool
If there is an ethical conflict concerning your direct supervisor, when is it appropriate to contact authorities or individuals NOT employed by the organization?
when there is a clear violation of the law
List the four standards of ethical conduct for management accountants. For each standard, give an example that demonstrates compliance with that standard.
1. Competence: Maintain an appropriate level of professional expertise by continually developing knowledge and skills 2. Confidentiality: Refrain from using confidential information for unethical or illegal advantage 3. Integrity: Abstain from engaging in or supporting any activity that might discredit the profession 4. Credibility: Communicate information fairly and objectively
In order, list the five steps in the decision-making process.
1. Identify the problem and uncertainties 2. Obtain information 3. Make predictions about the future 4. Make decisions by choosing among alternatives 5. Implement the decision, evaluate performance, and learn
Explain how a budget can help management implement strategy
A budget is a planning tool, a quantitative expression of a plan of action. First, actions are planned and then they are communicated to the entire organization.
Which item is NOT an indication of confidentiality under the Standards of Ethical Conduct? A
A) Keep information confidential except when disclosure is authorized or legally required. B) Inform all relevant parties regarding appropriate use of confidential information. C) Refrain from using confidential information for unethical or illegal advantage
A budget:
A) is a quantitative expression of a proposed management plan B) helps translate strategy into actions C) aids in the coordination and communication among various business functions
Ethical challenges for management accountants include:
A) whether to accept gifts from suppliers, knowing it is an effort to indirectly influence decisions B) whether to report unfavorable department information that may result in unfavorable consequences for a friend
Describe the value chain and how it can help organizations become more effective. Answer: A value chain is a sequence of business functions whose objective is to provide a product to a customer or provide an intermediate good or service in a larger value chain. These business functions include R&D, design, production, marketing, distribution, and customer service.
An organization can become more effective by focusing on whether each link in the chain adds value from the customer's perspective and furthers the organization's objectives.
Discuss the potential behavior implications of performance evaluation.
As measurements are made on operations and, especially, on individuals and groups, the behavior of the individuals and groups are affected. People react to the measurements being made. They will focus on those variables or the behavior being measured and spend less attention on variables and behavior that are not measured. In addition, if managers attempt to introduce or redesign cost and performance measurement systems, people familiar with the previous system will resist. Management accountants must understand and anticipate the reactions of individuals to information and measurements. The design and introduction of new measurements and systems must be accompanied with an analysis of the likely reactions to the innovations
How does a controller help "control" a company?
By reporting and interpreting relevant data, the controller exerts a force or influence that impels management toward making better-informed decisions.
Place the five steps in the decision-making process in the correct order: A = Obtain information B = Make decisions by choosing among alternatives C = Identify the problem and uncertainties D = Implement the decision E = Make predictions about the future
C A E B D
Which item is an indication of credibility under the Standards of Ethical Conduct?
Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.
Which statement is true?
Employees spend more attention on those variables that are getting measured.
A budget may be used as a planning tool, but NOT as a control tool.
FALSE
Accounting method for internal reporting purposes are specified by Generally Accepted Accounting Principles (GAAP).
FALSE
An external audit includes reviewing and analyzing financial and other records to attest to the integrity of the organization's financial reports and to adherence to its policies and procedures.
FALSE
Credibility includes maintaining an appropriate level of professional expertise by continually developing knowledge and skills.
FALSE
Employees pay little attention to how their performance is measured.
FALSE
Financial accounting reports financial and non financial information that helps managers implement company strategies.
FALSE
If a managerial accountant suspected his or her immediate superior of wrongdoing, the managerial accountant should request an immediate meeting with the Board of Directors.
FALSE
It is generally easy to quantify expected benefits and costs when applying the cost-benefit approach.
FALSE
Linking rewards to performance is a major deterrent to good management performance
FALSE
Staff management should NOT provide advice and assistance to line management.
FALSE
The Sarbanes-Oxley legislation does NOT provide a process for employees to report violations of illegal and unethical acts.
FALSE
The last step in the decision-making process is to make decisions by choosing among alternatives
FALSE
The technical considerations of budgeting encourage managers and other employees to strive for achieving the goals of the organization.
FALSE
To take advantage of changing market opportunities, the annual budget should be strictly enforced
FALSE
Tracking what is happening in other companies is illegal.
FALSE
When confronted with a potential ethical conflict, a managerial accountant should not contact his or her personal attorney concerning rights and obligations.
FALSE
Explain how a customer focus can result in increased profits for a company.
If customers who provide a company with the most profits are attracted, satisfied, and retained, profits will increase as a result.
Which item is NOT an indication of competence under the Standards of Ethical Conduct?
Keep information confidential except when disclosure is authorized or legally required.
Discuss the cost-benefit approach guideline management accountants use to provide value in strategic decision making.
Management accountants continually face resource allocation decisions. The cost-benefit approach should be used in making these decisions. Resources should be spent if the expected benefits to the company exceed the expected costs. The expected benefits and costs may not be easy to quantify, but it is a useful approach for making resource allocation decisions.
Briefly explain the planning and control activities in management accounting. How are these two activities linked to each other?
Planning business operations relates to designing, producing, and marketing a product or service. This includes preparing budgets and determining the prices and cost of products and services. A company must know the cost of each product and service to decide which products to offer and whether to expand or discontinue product lines.
Which of the following statements about the cost-benefit approach is true
Resources should be spent if they are expected to better attain company goals in relation to the expected costs of these resources.
Which of the following actions should a management accountant take first in confronting a potential ethical conflict concerning your direct supervisor?
Review your organization's procedures concerning resolution of such a conflict.
________ includes banking and short- and long-term financing, investments, and cash management.
Treasury
Classify each cost item of Ripon Printers into one of the business functions of the value chain, either (1) R&D, (2) design, (3) production, (4) marketing, (5) distribution, or (6) customer service. Item: a. cost of customer order forms b. cost of paper used in manufacture of books c. cost of paper used in packing cartons to ship books d. cost of paper used in display at national trade show e. depreciation of trucks used to transport books to college bookstores f. cost of the wood used to manufacture paper g. salary of the scientists attempting to find another source of printing ink h. cost of defining the book size so that a standard-sized box is filled to capacity
a. (4) marketing b. (3) production c. (5) distribution d. (4) marketing e. (5) distribution f. (3) production g. (1) research and development h. (2) design
Classify each cost item into one of the business functions of the value chain, either (1) R&D, (2) design, (3) production, (4) marketing, (5) distribution, or (6) customer service. Item: a. cost of samples mailed to promote sales of a new product b. labor cost of workers in the manufacturing plant c. bonus paid to a person with a 90% satisfaction rating in handling customers with complaints d. transportation costs for shipping products to retail outlets
a. (4) marketing b. (3) production c. (6) customer service d. (5) distribution
Value chain and classification of costs, car company. General Motors incurs the following costs: a. Electricity costs for the plant assembling the Chevrolet Camaro b. Transportation costs for shipping the Camaro to dealers c. Payment to Shelby Designs for the design of the Camaro. d. Salary of an engineer working on the next generation of Camaros e. Cost of GM employees' visit to an auto show to demonstrate the Camaro f. Testing the Camaro at the GM track g. Payment to television network for running Camaro advertisements h. Cost of brake pads purchased from outside supplier to be installed on the Camaro Required: Classify each of the cost items (a-h) into one of the business functions of the value chain. 1) Research and development 2) Design of products and processes 3) Production 4) Marketing 5) Distribution 6) Customer service
a. 3) Production b. 5) Distribution c. 2) Design of products and processes d. 1) Research and development e. 4) Marketing f. 2) Design of products and processes g. 4) Marketing h. 3) Production
For each type of report listed below, identify one planning decision and one controlling decision for which the information would be helpful. Assume you are a Walgreen Company store. Item: a. annual financial statements for the past three years b. report detailing sales by department by each hour of the day for the past week c. special study regarding increased road traffic due to the construction of a new shopping mall at a near-by intersection
a. Planning: Decision by shareholder about whether to purchase more stock in the company. Control: Decision by bank to determine if financial ratios maintained in the line-of-credit (LOC) agreement warrant increasing the LOC amount. b. Planning: Decisions regarding future staffing needs. Control: Decision regarding whether the recent sales promotion led to an increase in revenue. c. Planning: Decision of the store manager about whether to change the types of retail items carried. Control: Decision of the store manager regarding performance of the analyst that prepared the special study.
Which item is NOT a guideline used by management accountants to assist in strategic and operational decision making
balanced scorecard
Control measures should:
be linked by feedback to planning
The most important planning tool is a ________
budget
The Standards of Ethical Conduct for management accountants include concepts related to:
competence, confidentiality, integrity, and credibility
The ________ is primarily responsible for management accounting and financial accounting.
controller
________ includes providing financial information for reports to managers and shareholders, and overseeing the overall operations of the accounting system.
controllership
The scenario that resources should be spent if the expected benefits to the company exceed the expected costs describes:
cost-benefit approach
Planning consists of all of these areas EXCEPT:
evaluating performance
The act of simply measuring and reporting information:
focuses the attention of employees on those processes
The process of preparing a budget:
forces coordination and communication across business functions
Linking rewards to performance:
helps to motivate managers
The primary criterion when faced with a resource allocation decision is
how well the alternative options help achieve organizational goals in relation to the costs incurred for these systems
Responsibilities of a CFO include all of the following EXCEPT
investing in new equipment
Examples of the controller's functions include all EXCEPT:
investor relations
Management accounting is considered most likely to be successful when it:
is timely
The person(s) directly responsible for attaining of organizational objectives is/are:
line management
If there is an ethical conflict concerning your direct supervisor, you may contact all of the following groups EXCEPT:
local media
Complete a performance report for the month of May, 2011, for the Daily Bulletin, a regional newspaper showing four columns: 1) Actual Result; 2) Budgeted Amount; 3) Difference: Actual Result minus Budgeted Amount; 4) Difference as a Percentage of Budgeted Amount, given the following data:
look it over
Line management includes:
manufacturing managers
Employees ________ how their performance is measured.
pay close attention
A report showing the actual financial results for a period compared to the budgeted financial results for that same period would most likely be called a:
performance report
All of the following report to the CFO EXCEPT the:
production manager
Planning includes all of the following EXCEPT
providing feedback to help with future decision making.
The person(s) responsible for providing advice and assistance to line managers is/are:
staff management
A well-conceived plan allows managers the ability to:
take advantage of unforeseen opportunities
Long term financing is an integral part of the ________ function in an organization
treasurer's
