Practice Test
Managerial vs Financial

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1. Which of the following most accurately describes information that
is prepared to be used by management?
    a. useful, historical, preciseIncorrect
    b. comparable, verifiable, unbiasedIncorrect
    c. budgeted, projected, flexible formatManagement used information to help them make decisions. This information is forward looking and uses projections and budgets, therefore it is not historical or precise and is not given outside the company. Projections and budgets can not be verified until performance actually occurs. There are no required formats.
    d. exact, actual only, externalIncorrect

2. A managerial accountant communicating information without bias is
following which of these ethical standards?
    a. integrityIncorrect
    b. competenceIncorrect
    c. confidentialityIncorrect
    d. objectivityProviding information without bias and attempting to sway the user's opinion is being objective. Integrity is related to avoiding conflicts of interest, competence is the ability to provide useful information, and confidentiality is not sharing information with those who should not have access.

3. A management accountant who prepares a useful report after analyzing
data is exhibiting
    a. competenceA competent accountant has the ability to provide useful information that management can use to make a decision. Objectivity and neutrality are related to not swaying the users decision. Confidentiality is not sharing information with those who should not know.
    b. objectivityIncorrect
    c. confidentialityIncorrect
    d. neutralityIncorrect

4. Managerial accounting standards
    a. are issued by the Management Accounting Standards Board.Incorrect
    b. are legal standards issued by the Institute of Managerial Accountants
        that must be followedIncorrect

    c. do not exist except for the area of government contractingThere are no specific managerial accounting standards, except those established by the government specifically for the bidding of government contracts. Managerial accountants do follow common formats that have proven to be effective in providing information useful for internal decision making.
    d. are legally binding for certified managerial accountantsIncorrect

5. Managerial accounting is primarily concerned with
    a. generally accepted accounting principlesIncorrect
    b. providing information to creditors and investorsIncorrect
    c. historical transactionsIncorrect
    d. decisions management must make to operate the businessAll of the above are related to financial accounting, except (d.) which is related to managerial accounting.

6. In a decentralized organization, most decisions are made by
    a. the chief executive officerIncorrect
    b. divisional / department managersA decentralized organization provides for decisions to be made by the managers of each division / department. Decisions are made by those responsible for getting the particular objective accomplished.
    c. shareholdersIncorrect
    d. the board of directorsIncorrect

7. The Standards of Ethical Conduct for Management Accountants states
that when an ethical issue is discussed with a direct supervisor and
resolution is not satisfactory, the management accountant should
    a. take the issue to the chief executive officerIncorrect
    b. take the issue to the audit committeeIncorrect
    c. take the issue to the next higher level of managementThe issue should be taken up the chain of command one level at a time until the issue is resolved.
    d. take the issue to outside legal councilIncorrect

8. The process of comparing actual costs to budgeted costs and taking
corrective action is called
    a. planningIncorrect
    b. controllingBy definition, this process is called controlling
    c. implementingIncorrect
    d. monitoringIncorrect

9. The CMA examination is sponsored by
    a. internal auditors associationIncorrect
    b. Institute of Management AccountantsThe Institute of Management Accountants sponsors and regulates the certification of management accountants.
    c. Financial Executives AssociationIncorrect
    d. State regulators for each stateIncorrect

10. Management accounting information assists management in making which
of the following decisions?
    a. how to advertise the productIncorrect
    b. how to price the productIncorrect
    c. planning for profitabilityIncorrect
    d. both b. and c.Management reports are most often relevant to cost of the product or cost of operations. Management accountants must first determine costs which allows management to properly price the product to cover the cost and plan for profitability.

11. The process of relying on feedback to ensure a plan is being implemented is
    a. planningIncorrect
    b. directingIncorrect
    c. controllingThe act of controlling can be described as comparing actual results to planned results to determine if the organization is accomplishing planned goals.
    d. measuringIncorrect

12. Planning and control are
    a. the same thing, just two different termsIncorrect
    b. two of the basic functions of managementIncorrect
    c. similar to budgeting and performance evaluationIncorrect
    d. both b. and c.Planning and control are two of the basic functions of management and are also part of performance evaluation and preparing budgets. They are not the same thing, as control involves comparing actual results to planned results.

13. Determining the selling price of a particular product is an example of
    a. planningIncorrect
    b. controllingIncorrect
    c. directingIncorrect
    d. decision makingDetermining the selling price is a decision that management makes after analyzing cost and market data.

14. The accounting function within an organization is usually the
responsibility of
    a. the chief financial officerA. or D. Some textbooks state it is the chief financial officers responsibility and some state it is the controller. You will not see both in the answer, so chose whichever one is listed.
    b. the managerial accountantIncorrect
    c. the financial analystIncorrect
    d. the controllerA. or D. Some textbooks state it is the chief financial officers responsibility and some state it is the controller. You will not see both in the answer, so chose whichever one is listed.

15. Which of the following is a component of integrity required under
the Standard of Ethical Conduct for Management Accounting
    a. Maintain an appropriate level of professional competency
        by ongoing development of knowledge and skillsIncorrect

    b. Refrain from disclosing confidential informationIncorrect
    c. Avoid actual and apparent conflicts of interestAvoiding actual and apparent conflicts of interest is a component of integrity. a. is a component of competence. b. is a component of confidentiality. d. is a component of objectivity. These are the 4 key ethical standards required for management accountants.
    d. Communicate information fairly and objectivelyIncorrect

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