employees' behaviour
Management should consider
behavioural implications
Primary concern is adequacy of
disclosure
72) Is financial accounting or managerial accounting more useful to a plant (factory) manager? Explain your
answer.
Answer: Managerial accounting is likely to be much more useful to a plant manager than financial accounting.
Financial accounting typically gives financial information for the company as a whole; the plant manager
would find very little information in the financial accounting reports which relate directly to the plant
environment and the performance of the plant itself. Managerial accounting, on the other hand, could
provide the plant manager with information relating to just the plant. Examples of some types of information
provided by managerial accounting are:
a. comparison of budgeted costs versus actual costs.
b. tracking of safety incidents.
c. quality costs.
d. product line profitability.
e. profitability by shift.
(Student examples may vary.)
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73) Describe management accounting and financial accounting.
Answer: Management accounting provides information to internal decision makers of the business such as top
executives, managers, sales representatives, and production supervisors. Its purpose is to help managers
predict and evaluate future results. Reports are generated often and usually broken down into smaller
reporting divisions such as department or product line. There are no rules to be complied with since these
reports are for internal use only. Management accounting embraces more extensively such topics as the
development and implementation of strategies and policies, budgeting, special studies and forecasts, influence on
employee behaviour, and nonfinancial as well as financial information.
Financial accounting, by contrast, provides information to external decision makers such as investors and
creditors. Its purpose is to present a fair picture of the financial condition of the company. Reports are
generated quarterly or annually and report on the company as a whole. The financial statements must
comply with IFRS/ASPE. A CPA audits, or verifies, that the IFRS/ASPE are being followed.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
74) The CFO of a company is responsible for the day-to- day running of the company.
Answer: True False
75) The treasurer and the controller report directly to the CFO.
Answer: True False
76) The internal audit department reports directly to the subcommittee of the board of directors called the audit
committee.
Answer: True False
77) The internal audit department reports directly to the CFO.
Answer: True False
78) In most companies, managerial accountants no longer perform routine mechanical accounting tasks.
Answer: True False
79) Managerial accountants are now considered to be similar to advisors and business analysts.
Answer: True False
80) Oral and written communications skills are considered among the most valuable skills a management
accountant can possess.
Answer: True False
81) Technology has been a driving factor in the changing roles of management accountants.
Answer: True False
82) Management accountants spend more time planning, analyzing and interpreting accounting data and less time
recording routine accounting transactions than they have in the past.
Answer: True False
83) The only skill required of managerial accountants is that they have a solid knowledge of both financial and
managerial accounting.
Answer: True False
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84) Management accountants only need a solid understanding of managerial accounting, and not financial
accounting.
Answer: True False
85) Management accountants need a solid understanding of both managerial accounting, and financial accounting.
Answer: True False
86) Management accountants only advise cross- functional teams because teams consist of employees from R&D,
design, production, marketing, distribution, and customer service.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
87) Who typically manages the daily operations of a company?
A) The company's board of directors B) The CEO
C) The controller D) Stockholders
Answer: B
88) Who typically provides oversight for large corporations?
A) The CEO B) Stockholders
C) The Board of Directors D) The company president
Answer: C
89) The vice-president of operations directly reports to which person(s)?
A) The CEO B) The Board of Directors
C) The CFO D) The COO
Answer: D
90) The COO is typically responsible for managing which of the following aspect(s) of the company?