Chapter 1 MCQ part 1

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Apr 3, 2024

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Chapter 1 MCQ: 1. The various licensing bodies, such as the AICPA, IMA and FASB, have different levels of discipline for acting outside of the established ethical codes. These levels include all except which of the following: a. Suspensions from practice b. Forced retirement • Fines and suspension or expulsion from practice are all possible disciplinary actions for acting outside of the established ethical codes. c. Expulsion from practice d. Fines 2. The _________________was/were created as a framework for measuring organizational performance using both financial and nonfinancial performance measures. a. SWOT analysis b. SMARTER goals c. key performance indicators d. balanced scorecard 3. Leon is working on their budget and trying to determine how many custom skateboards they needs to sell to make a profit. What tool will be helpful for Leon? Why? a. Variance analysis, because he will be able to see where he overspent on raw materials and labor to help him streamline his processes. b. Transfer pricing to help Leon determine how much he should sell his skateboards to the direct consumer. c. Value-chain analysis to figure out where they may be leaks in his fixed costs. d. Contribution margin calculation, because he will be able to see how much is left from the production of each board to contribute to his fixed costs. • Leon should determine their direct labor, direct materials and overhead costs. Then from their selling price, determine the contribution margin. The contribution margin can be used to determine how many skateboards they will need to produce and sell to cover their fixed costs. 4. Minerva has a small, very custom retail store. They are assessing the value they add to their store and brainstorming ways to more efficiently meet the needs of their customers. How might Minerva add value for her customers? a. By opening a second location to serve more customers. b. By curating, selecting and purchasing products that meet the needs of her target market. c. By obtaining the cheapest items she can to stock her store. d. By reducing her direct labor hours, and moving to a cheaper location to lower prices for her customers. 5. Maynard Duck Boats, Inc. has been having trouble getting the fiberglass sheets to construct their boats. In an effort to streamline processes, what is the most reasonable possible option that Maynard could use to make sure they always have raw materials to complete their boats? a. They could buy all the fiberglass sheets they can get at one time, and store them in a newly constructed warehouse. b. They could buy or become a supplier, so they always have ready stock. • Deciding to undertake a portion of the value chain activities is always challenging. In this case, Maynard could either purchase an existing supplier or become their own supplier to ensure they have a steady supply of quality raw materials. Although the other options might be feasible, becoming their own supplier is the most reasonable under the circumstances. c. Maynard could start making their boats from aluminum instead of fiberglass. d. They could offer their supplier additional money to put their order on top of the list.

6. Jaleel has completed their mission statement and strategic path and is now working on goal setting. Jaleel has set the goal of $1,000,000 in sales for their newly developed widget between January and July of the current year. Does this fit as a SMART goal? Why or why not? a. No, because it is relevant, but is not specific or meaningful. b. No, because it may not be achievable for a new company with limited history. • Jaleel is opening a new company with a newly developed product. Although they have set a specific, meaningful, relevant and time-bound goal, the achievability of this goal could be questionable. The goal should be tough, but achievable to avoid psyching yourself out early. Perhaps, a more reasonable sales goal for the initial launch. This goal can then be evaluated and readjusted as Jaleel moves forward in his business planning and goal setting. c. Yes, because it is specific, meaningful, achievable, relevant and time-bound. d. Yes, because it is specific, relevant, meaningful, and he has set a clear time-frame. 7. Jaime is opening a mobile taco truck in his small town. While doing their SWOT analysis, they noticed that there are three egg roll trucks, a vegan truck and a farm-to-table truck already located in their area. Where would he note this in his SWOT analysis? a. Strength b. Threat c. Opportunity • Jaime would consider this to be an opportunity since they would be the only taco truck in their town. They should do some further research to make sure a taco truck has a large enough market to support their new venture. d. Weakness 8. Which of the following are not components of a balanced scorecard? a. Customer perspectives b. Learning and growth perspectives c. Financial perspectives d. External business processes perspective • The fourth component of the balanced scorecard is the internal business process perspective. All use objectives, initiatives, measures, targets and actuals to access organizational performance. 9. ____________is an important perspective of your personal balanced scorecard, because without it, you will be less effective in other areas of life. a. Health and well-being • Health and well-being are the foundation of the personal balanced scorecard. Our physical, emotional, and mental health enable us to have good relationships and be successful in our careers. 10. FASB, IMA and the AICPA are governing bodies that are tasked with what? a. Organizations that have standards of ethics for their members to help mitigate lapses in ethical judgement. • The AICPA, IMA and FASB are all organizations that have standards of ethical conduct in their expectations for members. This can help to mitigate lapses in personal judgement. 11. Amed was working on a project for their supervisor, when they noticed an inaccuracy in one of the calculations for manufacturing overhead. The inaccuracy would lead to potentially miscalculating cost of goods sold on their product, leading to overestimating the contribution margin for the next year. Amed

brings this to their supervisor’s attention, and corrects the error. Which IMA standard is Amed primarily following? a. Competence • Amed is performing their professional duties in accordance with relevant laws, regulations and technical standards, as well as providing decision support information and recommendations that are accurate, clear, concise and timely. They are helping to manage risk by correcting this error. Amed is following the standard of competence. 12. Ben is working on a tax return for a client, in addition to doing some analysis of direct materials and direct labor for the manufacturing process. Ben’s firm is contacted by the IRS that this client is in violation of several tax laws, and has requested copies of the workpapers for the last 5 years of returns. Ben releases the requested information. What IMA standard is Ben primarily complying with? a. Confidentiality Ben is primarily complying with confidentiality in this case. Because the IRS can legally require information to be released, Ben is not in violation of the confidentiality standard because he only released information that he was legally required to disclose. 13. Gigi is an accountant who works at a public accounting firm. They were asked to provide financial statements to the client and to have a discussion with them about some decisions they are trying to make based on the prior year’s financial information. Gigi prepares the statements, in addition to some spreadsheets and notes to help the client make good decisions. Which IMA standard is Gigi primarily following? a. Competence • Gigi is providing support information to their client to help them make decisions based on good information that is accurate, clear, concise and timely to help them recognize and manage risk. 14. Mallory and Nasha are both members of the IMA and work for the same publicly traded company. Another employee at their company came to them with some confidential information, and asked them if they would like to do an investment with him based on this information. Mallory and Nasha refused. What standard were they primarily adhering to? a. Integrity • Although this ethical issue could encompass several of the standards, it primarily focuses on integrity. Mallory and Nasha abstained from engaging in or supporting an activity that would discredit the profession. They also refrained from engaging in any conduct that would prejudice their ability to carry out their duties in an ethical manner. 15. Jaylen is participating in continuing professional education courses as part of their work as a cost accountant for a publicly traded company. Which IMA standard are they complying with by completing this additional coursework? a. Competence • Jaylen is maintaining an appropriate level of professional leadership by enhancing their knowledge and skills through continuing their accounting education. 16. Ben is a CPA working on a tax return for a client. They are also doing some tax planning and cost accounting processes for this client. They were asked by the client’s bank to provide financial information, including the tax return when it is finished. Ben informed the bank that they were unable to do this without permission from the client. What IMA standard is this an example of? a. Confidentiality • Ben acts with confidentiality as they keeps information confidential except when disclosure is authorized or legally required. In this case, it is not legally required to release this information to the bank, so they will need to obtain permission from the client to release this information.

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