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Management Accounting and Information System


1. What is Management?

2. Enumerate and discuss the four basic functions of management.

3. What is Management Accounting?

4. What is Financial Accounting?

5. What is Cost Accounting?

6. Discuss how management accounting, financial accounting, and cost accounting are
related and how they are used by managers in their management functions.

7. Enumerate the four major objectives of management accounting.

8. Enumerate the three different functions of accounting information.

9. Enumerate the six basic distinguishing characteristics of management accounting

discussed in this text.

10. Enumerate the most common decisions managers usually do. Give at least four.

11. Define an accounting system.

12. Enumerate three basic uses of accounting system.

13. Enumerate and discuss the four basic components of accounting system.

14. Enumerate and discuss the six basic guidelines in setting a good system design.

15. Enumerate and discuss the elements of good internal control. Give at least five.

16. Enumerate and discuss the three accounting system’s control mechanisms.

17. Draw a diagram depicting the elements of a computerized accounting system.

18. Define the term “cost management system”.

19. Enumerate the characteristics of an organization must possess in order the cost
management system works effectively.

20. Enumerate the objectives of cost management system.

TRUE or FALSE: Write “True” if the statement is true and write “False” if the statement is false.

1. Management accounting information generally pertains to an entity as a whole and is

very detailed.

2. Management accounting applies only to manufacturing companies.

3. Determining the unit cost of manufacturing a product is an output of management


4. The management function of planning is mainly concerned with setting goals and
objectives for the entity.

5. Directing is the process of determining whether planned goals are being met.

6. Decision-making is an integral part of the planning, directing, and motivating functions,

but not of the controlling function.

7. In practice, the planning, organizing, and controlling functions of management are kept
separate from the decision-making function.

8. The steps to be followed in implementing an organization’s objectives are set down

through strategic planning.

9. Strategic planning is sometimes referred to as setting policy.

10. “Controlling” refers primarily to setting maximum limits on spending in an


11. Management accountant must understand and anticipate the reactions of individual to
information and measurements.

12. Management accounting produces information that helps workers, manager, and
executives in organizations make better decisions and improve their processes and

13. Internal reporting is the preparation of financial reports based on generally accepted
accounting principles.

14. Accounting system is often the principal means of gathering data to aid and coordinate
the process of making the best collective operating or routine decisions in light of the
overall goals or objectives of an organization.

15. An effective accounting system provides information only to internal managers for use
in planning and controlling routine operations and in strategic planning.

16. Designing a good accounting system is a specialized job requiring a high degree of skill.

17. Accounting system must contain controls to achieve accuracy, reliability, and efficiency.

18. Accounting system must contain controls to achieve accuracy, honesty, and efficiency,
and speed.

19. The accuracy quality of information refers to the degree to which information is free
from error.
20. Information is said to be timely if it still useful to the decision makers before a decision
has been made.

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1. Management accounting
a. is concerned with costing product
b. is governed by generally accepted accounting principles
c. pertains to the entity as a whole and is highly segregated
d. places emphasis on special-purpose information

2. Management accounting information is generally prepared for

a. stockholders
b. managers
c. regulatory agencies
d. investors

3. Which of the following is not an internal user?

a. Corporate officers
b. Staff employees
c. Stockholders
d. Department managers

4. Which of the following is not part of management accounting?

a. Determining whether planned goals are being met
b. Reporting financial information to the shareholders
c. Calculating product costs
d. Controlling costs

5. Which one of the following does the planning function involve?

a. Analyzing financial statements
b. Setting goals and objectives for the entity
c. Hiring the right people for a particular job
d. Coordinating the accounting information system

6. In comparing financial and management accounting, which of the following more

accurately describes management accounting information?
a. historical, precise, useful
b. required, estimated, internal
c. budgeted, informative, adaptable
d. comparable, verifiable, monetary

7. Cost accounting is directed toward the needs of

a. Regulatory agencies
b. external users
c. internal users
d. stockholders

8. Financial accounting
a. is primarily concerned with internal reporting
b. is more concerned with verifiable, historical information than is cost accounting
c. focuses on parts of the organization rather than the whole
d. is specifically directed at management decision-making needs

9. Management accounting
a. must follow generally accepted accounting principles
b. information should be developed within the same general accounting system as
financial accounting
c. deals primarily with the needs of parties external to the firm such as investors
and creditors

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d. is just another financial accounting term

10. Management accounting information serves all of the following functions except:
a. assessing company credit risk
b. customer costing
c. management control
d. Operational control

11. Which one of the following is true concerning the managerial function of controlling?
a. It includes performance evaluation by management.
b. It is concerned mainly with operating a manufacturing segment.
c. It is performed only by the controller of a company.
d. It includes hiring and training employees.

12. Which of the following represents two management functions?

a. Regulating and directing
b. Controlling and directing
c. Controlling and auditing
d. Auditing and planning

13. Which management function the manager is performing when objectives are being
a. Regulating
b. Planning
c. Motivating
d. Directing

14. Management and financial accounting are used for which of the following purposes?
Management Accounting Financial Accounting
a. internal external
b. external internal
c. internal internal
d. external external

15. Management accounting

a. Is more concerned with the future than financial reporting.
b. Is less concerned with segments of a company than financial accounting.
c. Is more constrained by rules and regulations than financial accounting.
d. Is used only by external users.

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