Chapter 1 Introduction to Management Accounting

1. Chapter 1Introduction to Management Accounting Test

2. How should managers deal with risk when setting objectives? • Balance it against likely returns • Avoid it • Accept it as inevitable • Minimise it 10 of 30

3. In recent decades which one of the following has not resulted in the business environment becoming more turbulent and competitive? • Rapid changes in technology • Increasing pressure from owners for economic returns • Increasing sophistication of customers • Increasing regulation of domestic markets 26 of 30

4. A key difference between management and financial accounting is that the former tends to …. • Be forward looking • Have longer reporting intervals • Rely more on objective verifiable evidence • Be more general purpose 31 of 33

5. Which qualitative characteristic is more closely associated with the confirmation of past events and prediction of future events? • understandability • relevance • comparability • reliability 31 of 34

6. According to Peter Drucker, what is the purpose of a business? • To satisfy the needs of all those with a stake in the business • To enhance shareholder wealth • To create and keep a customer • To maximise profits 32 of 35

7. Which of the following is not a user of Financial Statements? • government • customers • management • suppliers 31 of 35

8. Which one of the following is not the task of the board of directors? • Monitoring the business on a day to day basis • Monitoring and controlling business activities • Communicating with shareholders • Setting business objectives and strategy 30 of 35

9. The key financial objective of a business is to be the enhancement/ maximisation of : • Profit • Owners’ wealth • Return on investment • Sales revenue 31 of 35

10. There are four qualitative characteristics that influence the usefulness of management accounting; these include relevance, reliability and comparability, which is the fourth? • timeliness • understandability • objectivity • accuracy 30 of 35

11. Management accounting information should be produced until the point where: • The value of information can no longer be quantified in monetary terms • The cost of information is minimised • The value of information to users is maximised • The cost of providing it is no longer less that the benefits 30 of 35

12. Which user group has most control over the range and content of information it receives? • managers • lenders • suppliers • Investment analysts 28 of 35

13. As a management accountant you would be more concerned with: • The annual reporting of performance • Preparing plans and forecasts of future activity • Reporting of past data • Providing information to shareholders on management performance 31 of 35

14. Which one of the following is not an area of decision making where management accounting information is required? • Developing plans and objectives • Evaluating share price information • Allocating resources • Determining costs and benefits 0 of 30

15. In which phase of the development of management accounting was there a concern for customers needs? • Phase 1 • Phase 2 • Phase 3 • Phase 4 0 of 30