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Exam 12: An Introduction to Management Accounting: a Strategic Perspective

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Question 1

True/False

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Many benefits associated with an information system are qualitative in nature.

A) True
B) False

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Question 2

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Which of the following is essential for management before it decides whether the business is succeeding or failing?

A) Accounts receivable.
B) A set of objectives.
C) A large organisation.
D) More current assets than non-current assets.

E) B) and C)
F) C) and D)

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Question 3

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A control system is limited in its application, as it depends on the motivation of individuals.

The monitoring process allows corrective action to be planned and taken after comparing actual performance with a predetermined plan.

Which of the following is part of the planning process?

Ordinary Office Products, Inc., a retail office supply company, has a single outlet in a large metropolitan area. The company has a policy of delivering any size order, even a bottle of Liquid Paper, to any customer, regardless of the distance. Management believes that without this delivery policy the company will not be able to maintain its market share. Since delivery costs are considered a selling expense and not a product cost, the company has a positive gross margin. That is, the company appears to be making money on its sales. The problem is that the company has shown an operating loss for each of the past three years and is on the verge of having its bank financing withdrawn. Management has been attempting to solve its profitability problems by increasing sales of its delivered merchandise.

In order for a banker to make judgements about the future needs and prospects of an entity in deciding whether to lend money, additional detailed information in the form of future cash flows may be required.

The efficiency and effectiveness of a control system can be affected by the costs associated with running the system.

The identification of the origin of controllable costs and income allows at least one manager to be responsible for the costs, and:

Planning and control decisions are similar in that both:

Describe the four major stages involved in planning and controlling an organisation.

Name three ways that accounting information can assist managers who make production decisions.

To be useful to management, accounting information must:

Distinguish managerial accounting from financial accounting. Your answer should include a brief discussion of differences in the types of information provided to users as well as differences in the identity of users of financial and managerial accounting information.

Short-term operating decisions can be translated into a budget, which is a plan of action expressed in monetary terms that compels management to look ahead and coordinate their activities.

The Australian Customs and Border Protection Service and the Australian Taxation Office have a statutory right of access to internal accounting information.

Decisions that require managers to evaluate the accomplishments of their organisation, and to make changes if the organisation is not meeting its goals, are usually referred to as:

Which of the following characteristics of information is desired by management?

In a dynamic economic environment, there is often the need to revise operating decisions in order to meet long-term objectives, but this will not impact on strategic decisions as these are related to policy changes and are not affected by operating decisions.

Planning is the process of: