1. Which of the following most accurately describes information that
     is prepared to be used by management?
       a. useful, historical, precise
       b. comparable, verifiable, unbiased
       c. budgeted, projected, flexible format
       d. exact, actual only, external     

C.   Management 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.

2. A managerial accountant communicating information without bias is
       following which of these ethical standards?
       a. integrity
       b. competence
       c. confidentiality
       d. objectivity

D.   Providing 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. competence
       b. objectivity
       c. confidentiality
       d. neutrality

A.   A 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.

4. Managerial accounting standards
       a. are issued by the Management Accounting Standards Board.
       b. are legal standards issued by the Institute of Managerial Accountants
           that must be followed
       c. do not exist except for in the area of government contracting
       d. are legally binding for certified managerial accountants

C.   There 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.

5. Managerial accounting is primarily concerned with 
       a. generally accepted accounting principles
       b. providing information to creditors and investors
       c. historical transactions
       d. decisions management must make to operate the business

D.   All 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 officer
       b. divisional / department managers
       c. shareholders
       d. the board of directors

B.   A 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. 

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 officer
       b. take the issue to the audit committee
       c. take the issue to the next higher level of management
       d. take the issue to outside legal council

C.   The issue should be taken up the chain of command one level at a time until
       the issue is resolved.

8. The process of comparing actual costs to budgeted costs and taking
       corrective action is called
       a. planning
       b. controlling
       c. implementing
       d. monitoring

B.   By definition, this process is called controlling

9. The CMA examination is sponsored by 
       a. internal auditors association
       b. Institute of Management Accountants
       c. Financial Executives Association
       d. State regulators for each state

B.   The Institute of Management Accountants sponsors and regulates the
       certification of management accountants.

10. Management accounting information assists management in making which
       of the following decisions?
       a. how to advertise the product
       b. how to price the product
       c. planning for profitability
       d. both b. and c.

D.   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. planning
       b. directing
       c. controlling
       d. measuring

C.   The act of controlling can be described as comparing actual results to planned
       results to determine if the organization is accomplishing planned goals.

12. Planning and control are 
       a. the same thing, just two different terms
       b. two of the basic functions of management
       c. similar to budgeting and performance evaluation
       d. both b. and c.

D.   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. planning
       b. controlling
       c. directing
       d. decision making

D.   Determining 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 officer
       b. the managerial accountant
       c. the financial analyst
       d. the controller

A. 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 skills
       b. Refrain from disclosing confidential information
       c. Avoid actual and apparent conflicts of interest
       d. Communicate information fairly and objectively

C.   Avoiding 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.