Management Accounting Information for Decision Making 7th edition by Atkinson Test bank

 
 

 
LO3
Terms:  Financial and nonfinancial information
Difficulty:  2
4.         Why has the role of management accounting expanded to include both financial and nonfinancial information?
 
Answer:
Decision makers involved in strategic information have begun to use nonfinancial information as leading indicators or to explain financial results--for example, to determine whether customer or employee satisfaction measures affect financial results such as sales and costs.
 
 
LO3
Terms:  Financial accounting, Management accounting
Difficulty:  3
5.         Is financial accounting or management accounting more useful to an operations manager? Why?
 
Answer: 
Management accounting is more useful to an operations manager because management accounting reports operating results by department or unit rather than for the company as a whole, it includes financial as well as nonfinancial data such as the number or percent of on-time deliveries and cycle times, and it includes quantitative as well as qualitative data such as the type of rework that was needed on defective units. It also provides information to control operations; it measures and evaluates existing systems to identify problems.
 
 
LO3
Terms:  Financial information, nonfinancial information
Difficulty:  3
6.         Give two examples of financial information and nonfinancial information.
 
Answer:  Financial information includes amounts that can be expressed in dollar amounts such as sales, net income, and total assets. It also includes ratios prepared using financial information such as the percentage increase in sales, return-on-sales, and return-on-investment.
 
Nonfinancial information includes measures that are not expressed in dollar amounts. For example, nonfinancial measures of customer satisfaction include the number of repeat customers or ranked estimates of satisfaction levels. Nonfinancial measures of production quality include percent of on-time deliveries, the number of defects, and production yield.
 
 

 
LO4
Terms:  Financial and nonfinancial information
Difficulty:  2
7.         How does the balanced scorecard identify the role of the importance of measuring an organization’s intangible resources?
 
Answer: 
By identifying the roles of the learning and growth, process, and customer perspectives in driving the organization’s objectives, the balanced scorecard identifies the need for organizations to measure, and thereby manage, their intangible assets, such as organization knowledge reflected in the design of operating systems, employee skills and attitudes, and the organization’s customer franchise.
 
 
LO4
Terms:  Intangible assets
Difficulty:  2
8.         Give at least two examples of intangible assets. Are intangible assets critical for success? Explain.
 
Answer: 
Yes, business has moved from the industrial age into the information age where knowledge-based intangible assets create value and are critical for success. Examples include loyal and profitable customer relationships, high-quality processes, innovative products and services, employee skills and motivation, and database and information systems.
 
 
LO5
Terms:  Performance evaluation
Difficulty:  3
9.         Discuss the potential behavior implications of performance evaluation.
 
Answer: 
As measurements are made on operations and, especially, on individuals and groups, the behavior of the individuals and groups are affected.
 
People react to the measurements being made. They will focus on those variables or the behavior being measured and pay less attention to those that are not measured. Managers and employees may take unexpected and undesirable actions to influence their score on performance measures. For example, managers may skip discretionary expenses in order to increase their bonus.