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Exam 1: What Is Managerial Accounting

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Question 1

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In an airplane factory,which of the following would most likely be classified as a direct material?

A) Sandpaper.
B) Jet engines.
C) Inexpensive fasteners.
D) Cleaning supplies.
E) None of the above.

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Question 2

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According to the IMA Statement of Ethical Professional Practice,credibility means that each member has a responsibility for all the following except:

A) communicating information fairly and subjectively.
B) keeping information confidential except when disclosure is legally required.
C) disclosing delays or deficiencies in information in conformance with policy or laws.
D) disclosing all relevant information that might influence user understanding.
E) None of the above.

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Question 3

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Assume you are the managerial accountant for a publicly held corporation.Your supervisor is the controller,and he directs you to ignore a significant amount of obsolete inventory for a report you are preparing for the CFO.Your supervisor indicates that the inventory issue will just "mess up our projections because adjusting the inventory value downward will result in lower profits for the quarter.If it's obsolete now,it will be obsolete next quarter,and we have much more flexibility built into the budget next quarter." Using the IMA's Statement of Ethical Professional Practice,what guidelines are violated and how should you handle this situation?

The three categories of manufacturing costs include direct materials,manufacturing overhead,and selling costs.

Nonmanufacturing costs consist of selling costs and indirect materials costs.

According to the IMA Statement of Ethical Professional Practice,competence means that each member has a responsibility for all the following except:

General and administrative costs would include factory utilities.

All of the following statements about Enterprise Resource Planning systems (ERP) are true except:

Managerial accounting focuses on providing historical financial information to outside users including shareholders and creditors.

Distinguishing between period and product costs can be done quickly and easily.

All of the following are typically performed by a treasurer except:

The Institute of Management Accountants (IMA)provides formal guidance to help in choosing ethically acceptable courses of action.

Match each of the following personnel with the description that best represents their role within most organizations. a.Responsible for all finance and accounting functions within the organization and typically reports to the chief executive officer. b.Elected by the shareholders of the company. c.Assists in preparing financial information, usually in accordance with GAAP, for those outside the company. d.Responsible for confirming that controls within the company are effective in ensuring accurate financial data, and serves as an independent link with the board of directors. e.Assists in preparing tax reports for governmental agencies including the Internal Revenue Service. f.Assists in preparing information used for decision-making within the organization. g.Oversees the managerial accountant, financial accountant, and tax accountant. h.Responsible for obtaining financing for the organization, projecting cash flow needs, and managing cash and short-term investments. -Internal auditor

All of the following are included in Balance Sheet accounts containing product costs except:

Match each of the following personnel with the description that best represents their role within most organizations. a.Responsible for all finance and accounting functions within the organization and typically reports to the chief executive officer. b.Elected by the shareholders of the company. c.Assists in preparing financial information, usually in accordance with GAAP, for those outside the company. d.Responsible for confirming that controls within the company are effective in ensuring accurate financial data, and serves as an independent link with the board of directors. e.Assists in preparing tax reports for governmental agencies including the Internal Revenue Service. f.Assists in preparing information used for decision-making within the organization. g.Oversees the managerial accountant, financial accountant, and tax accountant. h.Responsible for obtaining financing for the organization, projecting cash flow needs, and managing cash and short-term investments. -Treasurer

Before purchasing an Enterprise Resource Planning (ERP)system,companies must confirm that the benefits of an ERP system will outweigh the costs of implementation.

In a wooden boat factory,which of the following would most likely be classified as indirect labor?

Nonmanufacturing costs include direct labor and indirect labor.

Regardless of size,all companies have a chief financial officer (CFO)and a treasurer.

Match each of the following personnel with the description that best represents their role within most organizations. a.Responsible for all finance and accounting functions within the organization and typically reports to the chief executive officer. b.Elected by the shareholders of the company. c.Assists in preparing financial information, usually in accordance with GAAP, for those outside the company. d.Responsible for confirming that controls within the company are effective in ensuring accurate financial data, and serves as an independent link with the board of directors. e.Assists in preparing tax reports for governmental agencies including the Internal Revenue Service. f.Assists in preparing information used for decision-making within the organization. g.Oversees the managerial accountant, financial accountant, and tax accountant. h.Responsible for obtaining financing for the organization, projecting cash flow needs, and managing cash and short-term investments. -Tax accountant