Managerial Accounting: Tools for Business Decision-Making 6th Canadian Edition by Jerry J. Weygandt

 
3. Explain the importance of business ethics.
All employees in an organization are expected to act ethically in their business activities. In Canada, the professional accounting organization promotes high standards of ethics in the accounting profession. These standards of ethics can be used as guidelines in dealing with the public and the organizations’ members. In the United States, the Institute of Management Accountants’ Statement of Ethical Professional Practice provides the codes of conduct. Moreover, companies are now evaluating their performance with regard to their corporate social responsibility.
 
4. Identify changes and trends in managerial accounting.
Managerial accounting has experienced many changes in recent years. Among these are a shift toward meeting the needs of service companies and improving practices to better meet the needs of managers. Improved practices include a focus on managing the value chain through techniques such as just-in-time inventory and technological applications such as enterprise resource planning (ERP). In addition, techniques have been developed to improve decision- making, such as the theory of constraints and activity-based costing (ABC). Finally, many companies now use the balanced scorecard and data analytics in order to have a more comprehensive view of the company’s operations.  Data analytics is important in business to understand problems facing an organization, and to use data to both predict and influence customer behaviour.
In Canada, the accounting profession has recently been reorganized by the founding of CPA Canada (Chartered Professional Accountants of Canada) in 2013, into which the three legacy accounting bodies—Chartered Accountants (CA), Certified Management Accountants (CMA), and Certified General Accountants (CGA)—were merged.

 
TRUE-FALSE STATEMENTS
 
 
1. Management accounting and financial accounting, while in the same field, are mutually exclusive disciplines.
 
 
2. Given the decision to employ straight-line amortization or a usage-based amortization method, the management accountant’s need to report the most relevant economic information to external users will determine which method is used.
 
 
3. Decision making is an integral part of the planning, directing, and motivating functions, but not of the controlling function.
 
 
4. Employees with staff positions serve other employees, while those with line positions work directly in line with the company’s revenue generating goals.
 
 
5. Activity-based costing is a method of allocating overhead costs to products.

ANSWERS TO TRUE-FALSE STATEMENTS
 
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.

1.
F
2.
F
3.
F
4.
T
5.
T

MULTIPLE CHOICE QUESTIONS
 
 
6. Managerial accounting
a) information generally pertains to an entity as a whole and is very detailed.
b) applies only to manufacturing companies.
c) focuses primarily on reports for both internal and external users.
d) provides tools that help management make decisions and evaluate the effectiveness of those decisions.
 
 
7. Reports scrutinized by managerial accountants
a) do not include those focused on business subunits.
b) do not include non-financial data relevant to business decision making.
c) are highly aggregated.
d) are special purpose for specific decisions.
 
 
8. Managerial accounting
a) is concerned with costing products.
b) is governed by generally accepted accounting principles.
c) pertains to the entity as a whole and is highly aggregated.
d) places emphasis on special-purpose information.
 
 
9. Managerial accounting information is generally prepared for
a) shareholders.
b) managers.
c) regulatory agencies.
d) investors.
 
 
10. Managerial accounting information
a) pertains to the entity as a whole and is highly aggregated.
b) must be prepared according to generally accepted accounting principles.
c) pertains to subunits of the entity and may be detailed.
d) is prepared only once a year.
 
 
11. The major reporting standard for management accounting is
a) the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management.
b) the Sarbanes-Oxley Act of 2002.
c) relevance to decisions.
d) generally accepted accounting principles.
 
12. Managerial accounting applies to which of the following forms of business organizations?
a) sole proprietorship