1. A major difference between financial and managerial accounting is 
       a. government regulations apply to managerial accounting
       b. managerial accounting must follow MAAP and not GAAP
       c. managerial accounting reports are used externally
       d. managerial accounting reports are used exclusively by management     

D.   There are no rules or regulations for managerial accounting. Management reports
       are flexible and are designed to be useful for internal decision making.
       Management reports are not provided outside the company.

2. Management accounting 
       a. is more forward looking than financial accounting
       b. is not focused on external reporting requirements
       c. is more concerned with useful information than accurate information
       d. all of the above.

D.   All of the above are true with respect to management accounting.

3. Management accounting is directed towards meeting the needs of
       a. regulatory agencies, such as the IRS and the SEC
       b. external users
       c. internal users
       d. stockholders of the company

C.   Management accounting is directed towards helping management, internal
       users, make decisions. External users, a., b., and d, do not see
       or use reports prepared specifically for management decision making.

4. Financial accounting is directed towards
       a. internal reporting
       b. parts of the organization rather than the whole company
       c. reporting that is verifiable and historical
       d. management needs

C. Financial accounting records, summarizes and reports historical transactions
       that are verifiable. Reports are then provided to those outside the company.
       Financial accounting reports are related to the entire company. All other        
       answers are related to managerial accounting.

5. The organization that is primarily responsible for sharing general guidelines for
     management accountants is
       a. the internal revenue service
       b. American Society of Certified Public Accountants
       c. Institute of Certified Management Accountants
       d. Institute of Management Accountants

D.   The Institute of Management Accountants primary purpose is to share information
       and provide general guidelines for management accountants. They also
       sponsor the CMA examination and certification.

6. Ethical standards for managerial accountants are primarily related to the areas of
       a. disclosure, decision making, and planning
       b. competence, education, and creativity
       c. competence, confidentiality, integrity, objectivity
       d. decision making, planning, education, and competence

C.   The four main areas of ethical responsibility for management accountants are
       listed in c. above.

7. Managers use the following information for decision making
       a. financial statements since they are more relevant
       b. precise information
       c. information relevant to the decision that is being made
       d. information that is relevant to the total organization

C.   It is the managerial accountant’s responsibility to provide whatever        
       financial or qualitative information is necessary to make a good business
       decision. The information will be relevant to the part of the business that is
       impacted by the decision, not the total company. The managerial accountant        
       does not have the time luxury for it to be precise. Financial information focuses 
       on past information rather than the future.

8. The process of managing day to day operations is
       a. planning
       b. directing
       c. controlling
       d. measuring

B.   Directing is the process that management does to keep operations running
       smoothly on a day to day business.

9. An organization chart shows
       a. all areas of responsibility for managers
       b. informal communication
       c. formal lines of authority 
       d. profitability by department

C.   An organization chart shows who reports to who for each major piece of the
       company, which are formal lines of authority

10. Allowing lower levels of management to make decisions is
       a. a centralized organization
       b. decentralization
       c. always done in a company
       d. decided on a decision by decision basis

B.   A decentralized organization allows for decision making at lower levels of 
       management. Centralized organizations make all major decisions at the top.
       The type of structure a company has is dependent on many factors such as
       the culture of the company, the size of the company, experience of management.

11. When following the Standards of Ethical Conduct for Management Accountants,
       an accountant who is faced with an ethical decision should first
       a. write a memo describing the issue and publish it in the local newspaper
       b. clarify the issue with a competent advisor
       c. follow the established procedures of the organization, which normally is to
       discuss the issue with the immediate supervisor
       d. discuss the issue with all in the company who will listen

C.   According to the standards, the accountant should follow established procedures
       until they determine the procedures are not resolving the issue. Confidentiality
       should be maintained.

12. A managerial accountant does not perform which of the following?
       a. prepare budgets
       b. file and prepare tax returns with the IRS
       c. compare actual results to budgets
       d. prepare reports which show individual department performance

B.   The managerial accountant is responsible for doing all of the above except b.
       which is done by a financial accountant.

13. Which of the following characteristics is related to management accounting?
       a. use of generally accepted accounting principles for all reports
       b. reporting on historical transactions
       c. reporting on various parts of the organization
       d. reporting only on the organization as a whole

C.   Management accounting focuses on providing information to management at
       various departments within the organization. It is not governed by GAAP for
       reporting and does not report on the historical results of the organization as 
       a whole. Management accounting is concerned with providing reports for
       decision making relative to the future.

14. The process of making decisions about future operations is
       a. planning
       b. controlling
       c. implementing
       d. monitoring

A.   By definition, planning is the process of making decisions related to the future.

15. Managers involved in the process of controlling do all of the following except
       a. compare actual results to budgets
       b. identify the causes of difference in budgeted amounts and actual amounts
       c. take corrective action 
       d. revise the budget

D.   Revising the budget is a planning activity. All others listed above are functions 
       of controlling.