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As a Certified Management Accountant, Suzanne is bound by the standards of ethical conduct issued by the Institute of Management Accountants. During the course of business, Suzanne learned that her company has decided to discontinue a major product line. If she mentions this fact to her brother, who is a stockbroker, Suzanne could be in violation of the:


A) competence standard.
B) confidentiality standard.
C) integrity standard.
D) objectivity standard.

E) A) and B)
F) All of the above

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Select the incorrect statement regarding service companies.


A) Because service companies do not carry inventory, it is impossible to determine product costs.
B) Because the products of service companies are consumed immediately, there is no finished goods inventory on their balance sheets.
C) Managers of service companies are expected to control costs, improve quality, and increase productivity just like managers of manufacturing companies.
D) Material, labor, and overhead costs of service companies are treated as period costs.

E) None of the above
F) A) and D)

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Managerial accounting information is limited or restricted by which of the following authorities or principles?


A) Securities and Exchange Commission
B) Generally Accepted Accounting Principles
C) Managerial Accounting Standards Board
D) Value-Added Principle

E) A) and B)
F) None of the above

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Most internal users of accounting information need primarily global information that reflects the performance of the company as a whole.

A) True
B) False

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Who are the primary users of financial accounting information? Who are the primary users of managerial accounting information?

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Financial accounting information is used...

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All of the following are features of managerial accounting except:


A) information is provided primarily to insiders such as managers.
B) information includes economic and non-financial data as well as financial data.
C) information is characterized by objectivity, reliability, consistency, and accuracy.
D) information is reported continuously with a present or future orientation.

E) C) and D)
F) None of the above

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Benchmarking involves the identification of the best practices used by world-class competitors. Discuss the following widely recognized best practices: activity-based management and just in time inventory.

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Many companies have come to the conclusi...

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Which of the following most exemplifies the value-added principle?


A) An ongoing process where continuous improvement is the goal
B) A competitive management program that emphasizes quality
C) Information gathering and reporting activities should be restricted to those activities that add value in excess of their cost.
D) Managerial accounting information is measured in economic, physical, and financial terms.

E) B) and C)
F) C) and D)

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Product costs include materials, labor, and selling and administrative costs.

A) True
B) False

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The Sarbanes Oxley Act of 2002:


A) prohibits CPA's from becoming managerial accountants.
B) created Generally Accepted Accounting principles (GAAP) .
C) requires the CEO and CFO to defer responsibility for internal controls to external auditors.
D) requires management to establish a whistleblower policy.

E) A) and B)
F) A) and C)

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If a company misclassifies a general, selling and administrative cost as a product cost in a period when production exceeds sales:


A) net income will be overstated.
B) total assets will be understated.
C) gross margin will be understated.
D) Both net income will be overstated and gross margin will be understated.

E) B) and D)
F) C) and D)

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A manufacturing business paid $3,000 to purchase inventory. As a result, assets would increase by $3,000.

A) True
B) False

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What is a value chain? And what relationship is there between the value chain and activity-based management?

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The value chain is the sequence of activ...

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During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit. What is the amount of finished goods inventory on the balance sheet at year-end?


A) $10,000
B) $20,000
C) $4,000
D) $15,000

E) A) and D)
F) B) and C)

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Is depreciation on manufacturing equipment expensed in the period incurred? Explain why or why not.

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Depreciation on manufacturing ...

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Select the incorrect statement regarding the relationship between type of user and type of information.


A) Middle managers need more nonfinancial, or operational data than do senior executives.
B) Assembly line supervisors need more immediate feedback on performance than do senior executives.
C) Senior executives need less aggregated information than do lower-level managers.
D) Senior executives use general economic information as well as financial information.

E) A) and D)
F) A) and C)

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Which of the following types of labor costs will never flow through the balance sheet?


A) Plant supervision
B) Sales commissions
C) Material handling
D) Assembly labor

E) None of the above
F) All of the above

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What benefits may result from use of a just in time system?

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A just in time system reduces the amount...

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Which of the following costs is not considered to be a period cost?


A) Warehousing costs
B) Depreciation of delivery vehicles
C) Salaries paid to company executives
D) Freight paid on a purchase of raw materials

E) A) and B)
F) None of the above

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Opportunity, pressure and rationalization are the three elements of the fraud triangle.

A) True
B) False

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