Management Advisory Services antonio jaramillo dayag

MANAGEMENT ACCOUNTING CONCEPTS

What is Management Accounting/Financial Accounting?
Management Accounting is the process of identification, measurement, accumulation, analysis, preparation,
interpretation, and communication of information of financial (as well as non-financial information) that assists
management in fulfilling organizational objectives.

Financial Accounting involves recordkeeping of business transactions governed by GAAP, leading to the preparation
of financial statements for use of internal as well as external decision makers.
What is the relationship of cost accounting to managerial and financial accounting?
 Cost Accounting is a tool of both financial and managerial accounting. As part of Financial Accounting
cost accounting for manufacturing costs provides information on which to base inventory and cost of
products sold for incorporation in the financial statements. As part of Managerial Accounting, it provides
information to assist management in controlling current operations and in rational planning and decision-
making.
 Cost accounting is a subset of both Financial and Managerial accounting.
What is the Objective / Purpose of Management Accounting?
The purpose of management accounting is to provide information and participate in the management
process. They select and provide, to all levels of management, information needed in:
1. Planning, evaluating and controlling operations, decision making
2. Safeguarding the organization’s assets
3. Communicating with interested parties outside the organization, such as shareholders and
regulatory bodies
What is the Scope of Management Accounting?
The scope of management accounting has expanded beyond the boundaries of traditional accounting. Its
limits and the extent to which its technology will expand are not readily determinable at this point in its
development. Management accounting is not constrained by the conventions that governed financial
accounting.
Management accounting is concerned primarily with providing information to internal managers who are
charged with planning and controlling the operations of the firm and making a variety of management
decisions. Generally, management accountants for the following tasks:
1. Score keeping or data accumulation - which enables both internal and external parties to
evaluate organizational performance and position
2. Interpreting and Reporting of information that helps manager to focus on operational
problems, opportunities as well as inefficiencies
3. Problem-solving or qualifications of the relative merits of possible courses of action as well as
recommendations as to the best procedure. This is commonly associated with non-recurring
decisions.
Specifically, the management accountant provides a system which allows management to receive the
necessary information used in performing its administrative functions of (FUNCTIONS of
MANAGEMENT):
a. Planning / Organizing which involves setting of goals for the firm, evaluating the various
ways to meet the goals and picking out what appears to be the best way to meet the goals.
The development of budgets is an example of planning.
b. Controlling which involves the evaluation of whether actual performance conforms to
planned goals. Feedback, which signals whether operations are on track, is the key to effective
control. Comparing actual performance against budgeted performance and taking
corrective action where necessary is an example of controlling.
c. Decision Making this involves determination of predictive information (e.g. relevant costs)
for making important business decisions.
d. Directing (operational activities) and moti. It involves mobilizing people to carry out the
plans and overseeing day-to-day activities.

Place of Management Accounting

 Use of information – accounting or non-accounting information, quantitative or non-quantitative
information.
 Need for judgment – actual decision making judgment should be carefully exercised.
Similarities between Management and Financial Accounting
 The same considerations that make GAAP sensible for the purposes of financial accounting are
applied for purposes of management accounting.
 Both financial accounting & managerial accounting draw information from the same accounting
system.
Differences between Management and Financial Accounting
Areas of Comparison FINANCIAL ACCOUNTING MGT. ACCOUNTING
1. User of information Primarily for external users. Prepared for internal users
(management).
2. Guiding principles Generally Accepted Accounting Needs of management.
Principle.

1
 3. Optional/Required Mandatory (statutory requirement). Optional.
4. Type of information Financial (primarily monetary by Monetary and non-monetary
nature) (statistical).
5. Emphasis of reports Precision or accuracy (reliability). Timeliness (relevance) over
precision.
6. Purpose/End result For reportorial requirements. For decision-making.
7. Source of data Drawn from company’s system Drawn from internal and
(internal). external sources.
8. Amount of detail Compressed and simplified. Extensive and detailed.
9. Focus of information Focus on business as a whole. Focus on segments as well as
a whole.
10. Frequency Periodic (annually, quarterly). More frequent as need arises.
11. Time orientation Past, historical data. Future-oriented using present
and past data
12. Unifying model Assets = Liabilities + Equity. No unifying model or
equation.
Organizational Structure and the Role of Management Accountant’s in a Changing Environment
Almost all organizations are decentralized to some degree. Decentralization involves delegating decision
making authority to lower levels in the organization. Many of the activities constituting the field of
management accounting are interrelated and thus must be coordinated, ranked and implemented by the
management accountant is such a way as to meet the objectives of the organization. A major role of
management accountant is to make guidelines as to the application of the accounting (quantitative
information) and non-accounting (qualitative information) process to the organization so that the
organization’s objectives are achieved effectively. An organization chart shows the levels of
responsibility and formal channels of communication in an organization. It shows who reports to whom in
the organization. It shows formal lines of communication, or chain of command.
Typical Organizational Chart (Traditional/Classical Type)
President

VP, Production VP, Finance VP, Sales/Mktg.

Controller Treasurer

Assistant Assistant
Controller Treasurer

Special Cost Tax Internal General System &

Studies Accounting Manager Audit Accounting EDP
Manager Manager Manager Manager Manager

Cost Budget & Performance

Systems Standard Analyst
Analyst Cost Analyst

Cost Payroll Accounts Accounts Billing General

Clerk Clerk Receivable Payable Clerk Ledger
Clerk Clerk Bookkeeper
Line and Staff Relationship
Line authority is the authority to command action or give orders to subordinates. Line managers are directly
responsible for attaining the objectives of the business firm as efficiently as possible. It is exercise vertically
downward. Examples are sales managers and production managers typically have live authority.
Staff authority is the authority to advise but not to command others; it is exercised laterally (horizontally) or upward.
Staff managers give support, advice and service to line managers. Examples are found in VP-personnel, VP-
production, VP-purchasing. VP-finance (Chief Financial Officer).
The Chief Financial Officer (Vice President – Finance/Finance Director)
The CFO (VP-finance/Finance Director) who usually comes from an accounting background is the member of the
top management team who is responsible for providing timely and relevant data to support planning and control
activities and for preparing financial statements for external users or mainly responsible for overseeing the financial
operations of an organization. An effective CFO is considered a key member of the top management team whose
advice is sought to all major decisions.
The responsibilities of the CFO vary among organizations, but they usually include the following areas:
1. Controllership/Comptrollership
2. Treasurership
Controllership
Controllership may be defined as the function of business management which combines the responsibility for
accounting, reporting, measurement, operating controls, auditing, taxes and related areas. It is the practice of the

2
established science of control which is the process by which management assures itself that the resources are procured
and utilized according to plans in order to achieve the company’s objectives.
The chief accounting (managerial or financial) executive of an organization is called a controller (or comptroller) is
the financial executive primarily responsible for management and financial accounting. The controller provides reports
for planning and evaluating company activities (e.g., budgets and performance reports) and provides the information
needed to make management decisions, tax control and coordination with external auditors.
The controller’s authority is basically staff authority. However, in his own department, he has lin e
authority.
The term controller is based on the word control – but this should not be construed that the controller exercises
control in the same manner as stockholders, presidents and line managers do. The modern concept of controllership
maintains that the controller does control in a special sense, i.e., by reporting and interpreting relevant data (problem
solving and directing), the controller exerts a force or influence that impels management toward logical decisions
consistent with objectives.
Treasurership
Treasurership is a likewise a function to be undertaken by the treasurer. The treasurer has custody of cash and funds
invested. He is also responsible for maintaining relationships with investors, banks, insurance companies and other
creditors and preparing cash forecasts.
Similarly situated with controller, treasurer also exercises staff authority.

Comparison of the Controller’s Functions with the Treasurer’s Functions:

Controllership Treasurership
1. Government reporting 1. Provision of capital
2. Financial reporting and 2. Credit and collections
interpretation
3. Economic appraisal 3. Investor relations
4. Evaluating and consulting 2. Banking and custody of funds
5. Tax administration 5. Investments
6. Planning for control 6. Short-term financing
7. Protection of assets 7. Insurance and risk evaluation

Professional Ethics
In recent years, many concerns have been raised regarding ethical behavior in business and in public life. Fortunately,
the Institute of Management Accountants (IMA) of the United States has developed a very useful ethical code called
the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management. Even
though the standards were specifically developed for management accountants, they have much broader application.
Code of Conduct for Management Accountants
There are two parts of the Standards of Ethical Conduct. The first part provides general guidelines for ethical behavior.
In a nutshell, the management accountant has ethical responsibilities in four broad areas namely

1. To maintain a high level of professional competence

2. To treat sensitive matters with confidentiality
3. To maintain personal integrity, and
4. To be objective in all disclosing
Management accountants have an obligation to the organizations they serve, their profession, the public and themselves
to maintain the highest standards of ethical conduct. Adherence to these standards is integral in achieving the
objectives of management accounting. Management accountants may not commit acts contrary to these standards nor
shall they condone the commission of such acts by others within the organization. Management accountants have a
responsibility to:
On Competence:
 Maintain an appropriate level of professional competence by ongoing development of their knowledge
and skills.
 Perform their professional duties in accordance with relevant laws, regulations, and technical standards.
 Prepare complete and clear reports and recommendations after appropriate analyses of relevant and
reliable information
On Confidentiality:
 Refrain from disclosing confidential information acquired in the course of their work, except when
authorized, unless legally obligated to do so.
 Inform subordinates as appropriate regarding the confidentiality of information acquired in the course of
their work and monitor their activities to assure the maintenance of that confidentiality.
On Integrity:
 Avoid actual or apparent conflicts of interest and advise all appropriate parties of any potential conflict.
 Refrain from engaging in any activity that would prejudice their ability to carry out their duties ethically.
 Refuse any gift, favor or hospitality that would influence or appear to influence their actions.
 Refrain from either activity or passively subverting the attainment of the organization’s legitimate and
ethical objectives.
 Recognize and communicate professional limitations or other constraints that would preclude
responsible judgment or successful performance of an activity
 Communicate unfavorable as well as favorable information and professional judgments and opinions.
 Refrain from engaging in or supporting any activity that would discredit the profession.
On Objectivity:
 Communicate information fairly and objectively
 Disclose fully all relevant information that could reasonably be expected to influence an intended user’s
understanding of the reports, comments and recommendations presented.

3
The second part of the standards gives specific guidance what should be done if an individual finds evidence of ethical
misconduct within an organization.

The ethical standards provide sound, practical advice for management accountants and managers. They require
professional behavior, especially in avoiding conflicts of interests. They require management accountants to bring bad
news to the attention of their supervisors, and to work completely.
The Certificate of Management Accountant (CMA)
A management accountant who possesses the necessary qualifications and who possesses the rigorous professional
exam earns the right to be known as a Certified Management Accountant (CMA). In addition to the prestige that
accompanies a professional designation, CMAs are often given greater responsibilities and higher compensation than
those who have do not have such a designation.
Current Trends in Management Accounting
Impact on Organizational Structure
A variety of works describing how to make organizations function better such as, total quality management (TQM),
just-in-time philosophy and many more. Most of these are not directed specifically at improving firm’s internal
accounting system. However, if implemented, most of these organizational changes require significant changes in the
accounting system because the accounting system is an integral part of most firms’ organizational structure. The
design of a management accounting system should be guided by the challenges facing managers. There are at least four
themes common to many companies namely:

1. Customer focus theme

2. Value-chain and supply chain analysis
3. Key success factors
4. Continuous improvement and benchmarking

Customer Focus Theme

value chai n is a key focus that businesses of all types must be concerned with. The traditional saying “the
customer is always right” has never been more relevant. Manager’s should be aware of their product’s value to the
customer, which is the customer’s perceived difference between the benefits the customer receives and the sacrifice the
customer incurs to receive the product such as product price, quality, functionality, user-friendliness, customer service,
warranty and maintenance costs.
Successful pursuit of cost leadership and/or differentiation strategies requires an understanding of a firm’s value chain
(internal) and supply chain (external)
The Value Chain
A value chain refers to the sequence of business functions in which usefulness is added to the products or services of a
company. The term value refers to the increase in the usefulness of the product or service and as a result its value to the
customer.

The focus of value chain is on how goods or services that we consume created? Normally, many activities are involved
in securing basic raw materials and turning them into valuable products or services. The set of linked, value creating
activities, ranging from securing basic raw materials and energy to the ultimate delivery of products and services.
Value added is the increase in the value of the firm, its products, and its activities from a particular activity or process.
The absence of the value added is a sign of non-competitiveness or inefficiency.
Non-value added is essentially wasted effort. It represents a task such as moving inventory from one location to
another or inspecting something that has been produced in an error-free environment. By deleting the activity resources
are saved and no harm is caused or no value is lost.
It looks strategically at each part of the firm’s operations and asks what key contribution each part makes to the
competitive strength of the firm as a whole. Each link should add value to the firm’s operations.
Internal value chain is the set of activities required to design, develop, produce, market, and deliver products or
services to customers.
An organization’s supply chain (external) refers to the flow of all goods, services, and information into and out of the
organization. A supply chain often includes many companies and other organizations. Supply chain management means
proactively working with some or all of the organizations in a company’s chain to improve service and to manage or
reduce costs.
What is Strategic Resource Management (SRM)?
SR M involves the organizational planning for deployment of resources to create value for customers and
shareholders.
The foundation of SRM is the value chain (supply chain), or the set of processes that convert inputs into products and
services for the firm’s customers. It includes both internal and supplier processes. By reducing or eliminating activities
that add no value within the value chain, firms can become more efficient and effective.
Theory of Constraints
Along with a value chain analysis, managers should carefully examine the chain of linked activities with a view toward
identifying the constraints that prevent their organizations from reaching a higher level of achievement. Sometimes
called, the theory of constraints, this approach seeks to find the most effective ways to alleviate an organization’s, most
limiting constraint.

Key Success Factors

‘

Cross-Functional Teams
Cross functional managerial teams bring together production and operations managers, marketing managers,
purchasing and material-handling specialists, design engineers, quality management personnel, and managerial
accountants to focus their varied expertise and experience on virtually all management issues. Managerial accounting

4
information is the glue that holds the cross functional team together. The managerial accountant designs an information
system and provides data ranging across all aspects of the organization’s internal operations and external environment.
Working together, the cross functional team creates value for the organization by meeting the customer’s needs in the
most effective manner possible.
Computer-Integrated Manufacturing (CIM)/Computer-Aided Manufacturing
A CIM process is fully automated, with computers controlling the entire production process. In CIM systems, the types
of costs incurred by the manufacturer are quite different from those in traditional manufacturing environments.
Product Life Cycles and Diversity
One impact of highly automated manufacturing systems has been to enable manufacturers to produce an ever-more
diverse set of products. Moreover, the rate of which technology is changing means that the life cycles of most products
are becoming shorter. To be competitive, manufacturers must keep up with the rapidly changing marketplace.
Managers must have timely information about production costs and other product characteristics in order to respond
quickly and effectively to the competition.
Time-Based Competition
The production process must be efficient and product quality must be high. The product must be designed with the
customer’s needs in mind and with a view toward manufacturability. Delays between product development stages must
be reduced or eliminated. Response time, lead time, on time, and downtime are among the many time-based phrases
that today’s managers used in their daily conversations.
The production process must be efficient and product quality must be high. The product must be designed with the
customer’s needs in mind and with a view toward manufacturability. Delays between product development stages must
be reduced or eliminated.
Global Competition
Competition has become worldwide in many industries over the last several decades. This has been caused by:
1. Reduction in tariffs, quotas and others barriers to free trade.
2. Improvements in global transportation systems and information technology, and
3. Increasing sophistication in international markets.

Management accountant comes into the picture to plan, direct, control its operations, and make decisions using an
effective management accounting system that provide the relevant the it needs.

Information and Communication Technology Management

In the face of the increased global competition, firms around the world are adopting new manufacturing and
information technologies to remain competitive. For example, just-in-time (JIT) methods are adopted to reduce the cost
and waste of maintaining large levels.
Just-In-Time (JIT) Management
The traditional (job order or process costing system) manufacturing settings, inventories of raw materials and parts,
partially completed components (work-in-process), and finished goods were kept as a buffer against the possibility of
running out of stock. However, large buffer inventories consume valuable resources and generate hidden costs. With
the objective of cost effectiveness and efficiency, manufacturers have adopted a strategy for controlling the flow of
manufacturing in a multistage production process. In a just-in-time (JIT) production system, raw materials and parts
are purchased or produced just in time to be used at each stage of the production process.
Total Quality Management (TQM)
One implication of a JIT philosophy is the need to emphasize product quality. If a component is to be produced just in
time for the next production stage, it must be “just right” for its intended purpose. One flawed component can shut
down the entire production line, entailing considerable cost. Therefore, managerial accountants have become involved
increasingly in monitoring product quality and measuring the costs of maintaining quality. This information helps
companies maintain programs of TQM. This refers to the broad set of management and control processes designed to
focus the entire organization and all of its employees on providing products or services that do the best possible job of
satisfying the customer.

Continuous Improvement and Benchmarking

Global competition is forcing companies to continuously improve their operations. Continuous improvement is the
constant effort to eliminate waste, reduce response time, simplify the design of both products and processes, and
improve quality and customer service. Managerial accountants are contributing to the continuous improvement
programs of many organizations through the development of cost management systems.
Benchmarking is the process, by which a firm identifies its critical success factors, studies the best practices of other
firms (or other units within a firm) for these critical factors and then implement improvements in the firm’s process to
match or beat the performance of those competitors.

Cost Management System

A cost management system is a management planning and control system with the following objectives:
 To measure the cost of the resources consumed In performing the organization’s significant activities
 To identify and eliminate non-value added costs. These are the costs of activities that can be eliminated with
no deterioration of product quality, performance or perceived value
 To determine the efficiency and effectiveness of all major activities performed in the enterprise.
 To identify and evaluate new activities that can improve the future performance of the organization

5
Note the emphasis of cost management system on the organization’s activities. This emphasis, sometimes called
activity accounting, is crucial to the goal of product quality of goods and services at the lowest level possible cost. In
keeping with the focus on activities, managerial accountants have developed a system for determining the cost of
producing goods or services called activity-based costing (ABC). In an ABC system, the cost of the organization’s
significant activities are accumulated and then assigned to goods or services in accordance with how the activities are
used in the production of those goods and services. An ABC system helps management to understand the causal
linkages between activities and costs.

Using an activity-based costing system to improve the operations of an organization is called activity-based
management (ABM).
QUESTIONS
I. Management Accounting vs. Financial Accounting
1. Draws heavily from other disciplines such as economics and statistics
2. Prepare financial statements.
3. Provides information to internal managers.
4. Recognizes the past rather than the future.
5. Focuses on heavily relevant and flexible data.
6. In many cases, “common sense” is the most important guide for decision makers.
7. Is not mandatory.
8. Focus on segments as well as the entire organization.
9. Primary interests are the company as a whole.
10. It may not be in accordance with GAAP.
11. Designed to meet managers’ needs usually to make estimates and forecasts.
12. Is built around the fundamental accounting equation of debits and credits.
13. It relies on accounting principles structured around the accounting equation.
14. Draws heavily from other business disciplines, such as production and marketing.
15. Is heavily involved with the recordkeeping and reporting of assets, liabilities, and stockholders’ equity.
16. Focuses on planning, control, decision making, and performance evaluation.
17. Is heavily regulated.
18. A field that is becoming more "cross-functional" in nature.
19. Much of the field is based on costs and benefits.
20. Is involved almost exclusively with past transactions and events.
21. Much of the information provided is directed toward stockholders, financial analysts, creditors, and other external
parties.
22. Tends to focus more on subunits within an entity rather than the organization as a whole.
23. May become involved with measures of customer satisfaction, and the amount of actual cost incurred vs. budgeted
targets.
II - Identifying Management Functions
Suppose you are manager for Books for Wheels, Inc. which makes rolling book carts often used by libraries. The
company is considering adding a new product aimed at university students. The new product will be small, collapsible,
wheeled cart designed specifically to aid students in transporting textbooks across campus. After a thorough
investigation Book on Wheels decided to go forward with the new product aimed at university students. The product,
Campus Cart, has gone into production, and the first units have already been delivered to campuses across the country.

Match each of the following steps that took place as Book on Wheels move through the decision making, production,
marketing, and sale of The Campus Cart with the correct phase of the management process: planning/organizing,
directing/leading, and controlling.

1. Identifying five college campuses to serve as test markets.

2. Setting the goal of P1,000,000 in annual sales by the year 20x8.
3. Hiring workers for the manufacturing facility.
4. Overseeing the production and shipment of The Campus Cart.
5. Preparing one-year, three-year, and five-year budgets that detail the necessary resources and costs that will be
incurred to meet the projected sales forecast.
6. Deciding which new markets to expand into based on the first year’s sales results.
7. Implementing a bonus system to reward employees for meeting sales and production goals.
8. Deciding to spend more advertising dollars in regions where sales were slower than expected.
II. Staff vs. Line
For each of the pairs, indicate how the first individual is related to the second by writing (L) line authority, (S) staff authority or (N)
for no authority.
1. VP production, accounts receivable bookkeeper
2. VP finance, personnel director
3. Controller, budget analysts
4. VP finance, treasurer
5. Treasurer, controller
6. Controller, assistant controller
7. Controller, shipping clerk
8. Assistant controller, computer data processing clerk
9. Production supervisor, foreman
10. VP manufacturing, payroll clerk
11. Controller, VP production
III. Fill in the Blanks
1. Management accounting provides data for ______ uses.
2. The chief accounting executive in an organization if often called the _________.
3. The Institute of Management Accountant created by the National Association of Accountants, offer a
____________________________________, which recognized professional competence in the expanding field of
management accounting.

6
4. In contrast to financial accounting, management accounting is not necessary governed by the so-called
____________________.
5. Management accounting places more emphasis on the future rather than on the ____________.
6. One of the most important aspects of cost accounting is ___________________ for inventory valuation and income
determination.
7. _________________ is a function of management which involves the evaluation of whether actual performance conforms
to planned goals and use of _______________________ so that the firm’s goals are optimally attained.
8. The controller has ____________ authority over his/her subordinates but has _______ authority from the point of view of
the organization.
9. The principal function of the controller include:
a. Providing capital c. Both a and b
b. Short-term financing d. None of the above
10. Management accounting looks at parts as well as the business as a whole.
a. True b. False
IV- True or False/Multiple Choice
1. Management accounting is defined as the application of appropriate techniques and concepts in processing historical and
projected economic objectives and in the making of rational decisions with a view towards achieving those objectives.
2. Managerial accounting draws heavily on economic, statistics, operating research, and other disciplines as necessary in
providing accounting information.
3. Financial accounting provides information to individuals within the business organization while management accounting
provides information to parties outside the business entity.
4. The CMA program was founded on the basic principle that a marketing manager plays an influential role in the
management process
5. Managerial accounting is subjected to the same rules, regulations, and principles as in financial accounting.
6. Managerial accounting focuses on segments of the organization as well the whole organization, whereas the primary
interest of financial accounting is the company as a whole.
7. The objective of financial accounting is to organize accounting information for interested parties within the organization.
8. In management accounting, emphasis is given on identifying or matching costs with functions, projects or responsibilities
rather than with time periods.
9. Management accounting covers a much broader scope, for it goes beyond the boundaries of traditional accounting.
10. Management accounting tends to be more oriented to the future than in financial accounting, and it deals more frequently
with the organization as a whole rather than with subdivisions of the organization.
11. The development of management accounting systems involved behavioral problems.
12. Reports prepared under financial accounting are more extensive and detailed as compared with the reports prepared under
managerial accounting
13. Financial accounting reports are useful not only to internal management but also to external users.
14. Management accounting reports are mandatory while those of financial accounting are optional.
15. Financial accounting and management accounting maybe referred to as external accounting and internal accounting,
respectively.
16. Management accounting reports should always be prepared in accordance with GAAP.
17. Special reports prepared by managerial accountants serves the needs of decision-makers of the organization and should be
reported to serve the needs of outsiders.
18. Accounting reports are not prepared for supervisory management level because foreman and supervisors, exercise control
through personal supervision.
19. In management accounting, precision is more important than timeliness and relevance of information.
20. Management accounting is only a means to an end, the end being the financial statements.
21. Both financial and management accounting adhere to objectivity and cost concepts.
22. Almost all aspects of managerial accounting are not controlled by GAAP.
23. Aside from monetary information, management accounting deals with non-monetary information like units or product sold
or produced, number of workers, labor hours, quantity of materials, etc.
24. Managerial accounting information merely assists managers in rendering judgment, but it is not a substitute for judgment.
25. Cost accounting is a tool for both financial and managerial accounting.
26. Cost accounting is used for internal but never for external accounting reports.
27. Cost accounting data based is the foundation of cost data that underlies and support financial and managerial accounting.
28. The cost accounting system is the link between planning and control in the decision-making cycle.
29. Only quantitative information is needed by management to carry out its decision-making function.
30. Through the accountant, quantitative objectives are established to help management in setting up goals; historical
accounting data are provided for use as a basis in projecting future objectives and quantitative information regarding the
different possible courses of action.
31. In performing the planning function, the manager sees to it that operations are carried out in the best possible way.
32. Controlling involves setting of both immediate and long range goals for the organization, predicting future conditions that
are expected to prevail and determining the best strategy to use so that the goal act may be achieved.
33. Planning and controlling have one thing – they both involved decision-making.
34. Planning involves the establishment of goals and the selection of courses of action to achieve those goals.
35. Planning includes only short-term decisions.
36. In performing his function, the manager should rely solely in accounting information.
37. Executive attention is management by exception should be focused only on significant deviations from expected results.
38. Control does not involved implementation of plans but considers feedback that influences future decisions or activities.
39. The performance reports that are so widely used to judge decisions, subunits, and managers have enormous influence on
the behavior of the affected individuals.
40. The three critical elements of a budget are a plan, a set of resources, and a time interval.
41. No firm has complete freedom of choice in making decisions.
42. Supervisors are not permitted to make planning and control decisions within their own jurisdictions.
43. If accounting information serves management, the accountant must consider the goals of management.
44. Accounting information of one kind or another is used by almost participant in economic activity.
45. The chief accounting executive of an organization is called the controller.
46. In an organizational set-up, the controller’s immediate supervisor is the comptroller.
47. Controllership may be defined as the function of business management which combines the responsibility for accounting,
reporting, measurement, auditing, taxes, operating controls, and related areas.
48. Strictly speaking, the controller controls operations.
49. The controller is responsible for providing capital and short-term financing for the firm.
50. The controller’s function is basically an accounting function.
51. The treasurer of the company is responsible for the accounting and monetary functions of the entity.
52. The Chief Financial Officer/VP-Finance of an organization is responsible for ensuring that line operations run smoothly.
53. The primary interested parties of internal reporting are top, middle, and lower management.
54. Top management generally faces unstructured or semi-structured problems that are resolved through strategic planning.

7
 55. Middle management deals with semi-structured problems relating primarily to obtaining and using resources effectively
and efficiently.
56. Lower management faces semi-structured or structured problems that deal with specific tasks.
57. Lower management needs information that is detailed, accurate, short-term in nature, and provided frequently and
routinely.
58. Decentralization means the delegation of decision-making authority throughout an organization by allowing managers at
various operating levels to make key decisions relating to their own area of responsibility.
59. Globalization is the act or state of becoming worldwide in scope or application.
60. The following are all ethical considerations: competence, confidentiality, integrity and objectivity.
61. Competence: Ongoing development of knowledge and skills, performance of duties in accordance with relevant laws,
adherence to regulations and technical standards, and preparation of complete and clear reports for management.
62. Confidentiality: Refraining from disclosing, using, or appearing to use confidential information acquired in the course of
the managerial accountant's work.
63. Integrity: Avoiding conflicts of interest in activities that would prejudice the managerial accountant's ability to carry out his
or her duties ethically, and refraining from other activities that would discredit the profession.
64. Credibility: Communication of information fairly, objectively, and fully.
65. The Standards of Ethical Conduct for Management Accountants promulgated by the Institute of Management Accountants
specifically state that management accountants' sole ethical responsibility is to not break any laws.
66. The Standards of Ethical Conduct for Management Accountants developed by the Institute of Management Accountants
contain a policy regarding confidentiality that requires management accountants to refrain from disclosing confidential
information acquired in the course of their work:
a. except when authorized by management.
b. in all situations.
c. except when authorized by management, unless legally obligated to do so.
d. in all cases not prohibited by law.
67. The Institute of Management Accountants (IMA) has developed ethical standards for management accountants. What four
categories has the IMA classified these standards into?
a. Reliability, Objectivity, Commitment, and Competence
b. Objectivity, Integrity, Commitment, and Confidentiality
c. Observation, Integrity, Closure, and Competence
d. Competence, Objectivity, Integrity, and Confidentiality
e. Reliability, Understandability, Flexibility, and Integrity
68. Samantha Galloway is a managerial accountant in the accounting department of Mustang Industries, Inc. Samantha has just
discovered evidence that some of the corporation's marketing managers have been wrongfully inflating their expense
reports in order to obtain higher reimbursements from the firm. According to the Institute of Management Accountants'
Standards of Ethical Conduct, what should Samantha do upon discovering this evidence?
a. notify the controller.
b. notify the marketing managers involved.
c. notify the president of the corporation.
d. ignore the evidence because she is not part of the Marketing Department.
V – Matching Type
Match the following terms (A) with the correct description/definition (B)
A - Terms
Strategic Resource Management Organizational chart
Theory of Constraints Benchmarking
Cross-Functional Teams Value-added
Computer-Integrated Manufacturing (CIM)/ TQM
Computer-Aided Manufacturing Cost Management System
Time-Based Competition Activity accounting
Global Competition Value chain
Internal value chain Cost accounting
Management Accounting Financial Accounting
Just-In-Time (JIT) Management ABC
Supply chain Non-value added
Continuous Improvement Activity-based management (ABM)
Competence Confidentiality
Integrity Objectivity
B – Descriptions/Definitions
1. It is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of
information of financial (as well as non-financial information) that assists management in fulfilling organizational objectives.
2. It involves recordkeeping of business transactions governed by GAAP, leading to the preparation of financial statements for use
of internal as well as external decision makers.
3. The managerial accountant designs an information system and provides data ranging across all aspects of the organization’s
internal operations and external environment. Working together, the cross functional team creates value for the organization by
meeting the customer’s needs in the most effective manner possible.
4. It involves the organizational planning for deployment of resources to create value for customers and shareholders.
5. It is the increase in the value of the firm, its products, and its activities from a particular activity or process. The absence of the
value added is a sign of non-competitiveness or inefficiency.
6. It is essentially wasted effort. It represents a task such as moving inventory from one location to another or inspecting something
that has been produced in an error-free environment. By deleting the activity resources are saved and no harm is caused or no
value is lost.
7. It is the set of activities required to design, develop, produce, market, and deliver products or services to customers.
8. It refers to the flow of all goods, services, and information into and out of the organization.
9. It is fully automated, with computers controlling the entire production process. In CIM systems, the types of costs incurred by
the manufacturer are quite different from those in traditional manufacturing environments.
10. It refers to the sequence of business functions in which usefulness is added to the products or services of a company.
11. The product must be designed with the customer’s needs in mind and with a view toward manufacturability. Delays between
product development stages must be reduced or eliminated.
12. It causes reduction in tariffs, quotas and others barriers to free trade and improvements in global transportation systems and
information technology, and eventually increasing sophistication in international markets.
13. Raw materials and parts are purchased or produced just in time to be used at each stage of the production process.
14. It is a tool of both financial and managerial accounting.
15. This refers to the broad set of management and control processes designed to focus the entire organization and all of its
employees on providing products or services that do the best possible job of satisfying the customer.
16. It is the constant effort to eliminate waste, reduce response time, simplify the design of both products and processes, and
improve quality and customer service. Managerial accountants are contributing to the continuous improvement programs of
many organizations through the development of cost management systems.
8
17. It is the process, by which a firm identifies its critical success factors, studies the best practices of other firms (or other units
within a firm) for these critical factors and then implement improvements in the firm’s process to match or beat the performance
of those competitors.
18. It involves recordkeeping of business transactions governed by GAAP, leading to the preparation of financial statements for use
of internal as well as external decision makers.
19. It is used measure the cost of the resources consumed In performing the organization’s significant activities, identify and
eliminate non-value added costs, determine the efficiency and effectiveness of all major activities performed in the enterprise.
20. The emphasis of cost management system is on the organization’s activities. It is crucial to the goal of product quality of goods
and services at the lowest level possible cost.
21. The cost of the organization’s significant activities are accumulated and then assigned to goods or services in accordance with
how the activities are used in the production of those goods and services.
22. The used of ABC system to improve the operations of an organization.
23. It is a tool of both financial and managerial accounting.
24. It shows the levels of responsibility and formal channels of communication in an organization.
25. Maintain an appropriate level of professional competence by ongoing development of their knowledge and skills.
26. Refrain from disclosing confidential information acquired in the course of their work, except when authorized, unless legally
obligated to do so.
27. Avoid actual or apparent conflicts of interest and advise all appropriate parties of any potential conflict.
28. Disclose fully all relevant information that could reasonably be expected to influence an intended user’s understanding of the
reports, comments and recommendations presented.
VI - True or False (with answers)
1. Generally accepted accounting principles govern financial accounting but not managerial accounting.
2. Economic events are the raw data for both financial and managerial accounting.
3. Internal financial statements must be prepared using generally accepted accounting principles. F
4. The form and content of reports can influence decisions made by managers.
5. Some managerial accounting reports contain costs not incorporated in the basic accounting system.
6. A professional examination exists to test the competence of financial accountants but not of managerial accountants. F
7. Managerial accountants should, but have no obligation to, maintain their professional skills. F
8. Although financial and managerial accounting differs in many ways, they are similar in that both rely on the same underlying
financial data.
9. Managerial accounting is a branch of financial accounting and serves essentially the same purposes as financial accounting. F
10. Managerial accounting places greater emphasis on the future than financial accounting, which is primarily concerned with the
past.
11. Managerial accounting is not needed in a non-profit or governmental organization. F
12.  Financial accounting information is designed for decision-makers who are directly involved in the daily management of the
firm. F
13. It is more important for financial accounting information to be comparable between firms than to be useful for managerial
decision-making. 
14. Cost accounting information is designed primarily for managers to use in their decision making. 
15. Generally accepted accounting principles (GAAP) are designed to provide consistency in reporting accounting data. 
16. Cost accounting information developed for managers to use in making decisions must comply with generally accepted
accounting principles (GAAP). F
17. The most important participants that management must consider in a business are the owners. F
18. Cost accounting information can be used by managers to defraud customers, creditors, and owners.
19. When carrying out their planning activities, managers select a course of action and specify how the action will be implemented.
20. When carrying out their planning activities, managers obtain feedback to ensure that the plan is actually carried out and is
appropriately modified as circumstances change. F
21. The controller occupies a line position in an organization. F
22. A firm's organization chart will normally show both the formal and informal lines of reporting and communication. F
23. Traditionally, companies have maintained large amounts of raw materials, work in process, and finished goods inventories to act
as buffers so that operations can proceed smoothly even if there are unanticipated disruptions.
24. The value chain comprises activities from research and development through the production process, but does not include
activities related to the distribution of products or services.  F
25. Marketing is the process that informs potential customers about the attributes of products or services, leading to their eventual
sale. 
26. Administrative functions are not included in the value chain because they are implicitly included in every business function. 
27. The supply chain is a linked set of organizations that exchange goods and services in combination to provide a final product or
service to the customer. 
28. In essence, the value chain and the supply chain are similar; each creates something for which the customer is willing to pay. 
VII - Multiple Choice
1. Management accounting is used by an organization’s management for multitude of purposes that do not include
a. Marketing (x) c. Evaluation
b. Control d. Reporting
2. Managerial accounting reports are
a. less specific than financial accounting reports
b. more specific than financial accounting reports (x)
c. very similar to financial accounting reports
d. required to be identical for all organizations
3. Which of the following characteristics does not relate to management accounting?
a. accounting reports may include nonmonetary information
b. it is subject to restrictions imposed by GAAP (x)
c. reports are often based on estimates and are seldom useful for anything other than the purpose for which they are prepared
d. it provides data for internal users within the business organization.
4. Managerial accounting places less emphasis on ________ and more emphasis on _______ than financial accounting.
a. planning; nonmonetary data c. precision; nonmonetary data (x)
b. budgets; estimated data d. estimates; actual data
5. Which of the following statements pertaining to management accounting is not true?
a. Management accounting makes use of data resulting from the financial accounting system
b. Management accounting provides that information essential for planning, evaluating, and controlling the strategies, tactics,
and operations of an organization
c. Accountability as a concept in management accounting refers to the identification of elements or activities which
management can or cannot influence, assessment of risks and sensitivity factors to facilitate the use of data for the control,
evaluation and corrective functions of management
d. Managerial accounting is the branch of accounting concerned with reporting to external parties for decision making
purposes (x)

9
6. Cost and managerial accounting systems are goods in the economic sense and, as such, their benefits must exceed their costs.
When managerial accounting systems change, the cost that is frequently ignored is the cost of
a. Educating users (x) c. Training accounting staff
b. Gathering and analyzing data d. Preparing reports
7. Which statement about the degree of detail in a report is true?
a. It depends on the level of the manager receiving the report.
b. It may depend on the frequency of the report.
c. It depends on the type of manager receiving the report.
d. All of the above. (x)
8. Managerial accounting is similar to financial accounting in that
a. both are governed by generally accepted accounting principles.
b. both deal with economic events. (x)
c. both concentrate on historical costs.
d. both classify reported information in the same way.
9. Managerial accounting differs from financial accounting in that it is
a. more concerned with the future.
b. more concerned with segments of a company.
c. less constrained by rules and regulations.
d. all of the above. (x)
10. One of the ways managerial accounting differs from financial accounting is that managerial accounting
a. is bound by generally accepted accounting principles.
b. classifies information in different ways. (x)
c. does not use financial statements.
d. deals only with economic events.
11. Which activity is NOT normally performed by managerial accountants?
a. Assisting managers to interpret data in managerial accounting reports.
b. Designing systems to provide information for internal and external reports.
c. Gathering data from sources other than the accounting system.
d. Deciding the best level of inventory to be maintained. (x)
12. Which function is most directly related to management by objectives?
a. Planning. (x)
b. Control.
c. Decision making.
d. Reporting.
13. Which consideration influences the frequency of an internal report?
a. The wishes of the managers receiving the report.
b. The frequency with which decisions are made that require the information in the report.
c. The cost of preparing the report.
d. All of the above. (x)
14. The professional certification most relevant for managerial accountants is the
a. CMA. (x) c. CISA
b. CPA. D. CFA
15. This consists of identifying alternatives, selecting from among alternatives the one that is best for the organization, and specifying
what actions will be taken to implement the chosen alternative?
a. controlling c. directing
b. planning (X) d. motivating
16. The accounting and other reports coming to management that are used in controlling the organization are called:
a. feedback (x) c. budget
b. performance report d. financial accounting
17. Planning and control are
a. different names for the same thing.
b. the basic functions of management. (x)
c. described equally well by the terms "decision making" and "performance evaluation."
d. exemplified by, respectively, financial statements and budgeting.
18. The delegation of decision making authority throughout an organization by allowing managers at various operating levels to make
key decisions relating to their area of responsibility is called:
a. planning c. controlling
b. directing d. decentralization (x)
19. A position on the organization chart that is directly related to achieving the basic objectives of an organization is called:
a. a line position(x) c. chief financial officer
b. a staff position d. controller
20. It provides services or assistance to other parts of the organization and does not directly achieve the basic objective of the
organization.
a. a line position c. chief financial officer
b. a staff position (x) d. controller
21. Which of the following is not a characteristic of “staff” authority?
a. it gives support, advise, and service to line managers
b. it is exercised laterally or upward
c. it has the authority to command action or give orders to subordinates (x)
d. none of the above
22. Which type of authority do management accountants generally exercise?
a. Functional c. Line
b. Company d. Staff (x)
23. Managerial accounting differs from financial accounting in that financial accounting is
a. more oriented toward the future
b. primarily concerned with external financial reporting (x)
c. concerned with non-quantitative information
d. heavily involved with decision analysis and implementation of decisions.
24. Financial accounting and managerial accounting may be thought of as reporting, respectively:
a. past financial performance, future financial outcomes (x)
b. past financial performance for both
c. future financial outcomes, and past financial performance
d. future financial outcomes for both
25. The field of accounting that depends on generally accepted accounting principles (GAAP) is called 
a. cost accounting. c. managerial accounting
b. financial accounting (x0 d. responsibility accounting
  26. Which field of accounting emphasizes relevancy over comparability? 
10
 a. cost accounting. (x0 c. responsibility accounting
b. financial accounting. d. international accounting
27. The major functions of management include all but which of the following?
a. Planning c. Controlling
b. Preparing budget reports(x) d. Decision making
28. The concept of “management by exception” refer to management’s
a. consideration of only those items which vary materially from plans (x)
b. consideration of only rare events
c. consideration of items selected at random
d. none of the above
29. Accounting function is to
a. measure financial events occurring in a business enterprise
b. communicate relevant information about financial events to interested users
c. convert quantitative data into useful information
d. all of the above (x)
30. Controllers are ordinarily not concerned with
a. preparation of tax returns
b. reporting to government
c. protection of assets
d. investor relations (x)
31. The controller of a company or other organization is
a. a staff manager (x)
b. an operating manager.
c. an accountant, not a manager.
d. a natural manager.
32. Which of the following is a Controller’s responsibility?
a. tax planning and accounting (x)
b. custodial of funds
c. in-charge of credit and collection
d. arranging short-term financing
33. The responsibility for safeguarding financial assets and arranging financing is given to the
a. Controller c. Comptroller
b. Chief financial officer d. Treasurer (x)
34. The treasury function is not usually concerned with
a. financial reporting (x)
b. short-term financing
c. cash custody and banking
d. credit extension and collection of bad debts.
35. Management activities can be classified in three levels: strategic planning, management control, and operational control.
Information requirements vary with the level of management activity. Which of the following best describes the information
requirements for strategic planning?
a. frequent use, external, aggregate information
b. future-oriented, outdated, detailed information
c. highly current, accurate, largely internal information
d. wide scope, aggregate, future-oriented information (x)
36. In terms of financial performance, you would expect revenue growth, negligible profits, negative cash flows, and negative return
on assets during which stage of an organization’s life cycle?
a. Growth stage c. Decline stage
b. Maturity stage d. Start-up stage (x)
37. The Code of Ethics for Management Accountant requires a financial manager/management accountant to follow the established
policies of the organization when faced with an ethical conflict. If these policies do no resolve the conflict, the financial
manager/management accountant should:
a. consult the board of directors immediately
b. discuss the problem with the immediate superior if he/she is involved in the conflict.
c. communicate the problem to authorities outside the organization
d. contact the next higher managerial level if initial presentation to the immediate superior does not resolve the conflict. (x)
38. Financial managers/management accountants are obligated to maintain the highest standards of ethical conduct. Accordingly the
Code of Ethics for Management Accountants explicitly requires that they:
a. obtain sufficient competent evidence when expressing an opinion.
b. non condone violation by others (x)
c. comply with GAAS
d. adhere to GAAP
VIII - Multiple Choice
1. Which item is NOT an IMA Standard for Ethical Conduct?
a. Integrity. c. Loyalty (x)
b. Competence. d. Objectivity
2.  According to the Institute of Management Accountants (IMA), the final step in resolving an ethical dilemma is to 
a. resign from the organization. (x)
b. call the IMA's ethics hotline.
c. report the circumstances to a local newspaper.
d. consult with an objective, independent advisor.
e. discuss the situation with an immediate supervisor.
3. A detailed report to management comparing budgeted data to actual data for a specific time period is called a:
a. budget c. performance report (x)
b. planning report d. controller’s report
4. Which one of the following reasons is not a significant reason for planning in an organization?
a. Promoting organization among operating units
b. Forcing managers to consider expected future trends and conditions
c. Developing a basis for controlling operations
d. Monitoring profitable operations (x)
5. Certain phases of the planning process should be formalized for all of the following reasons except that
a. informal plans and goals lack the necessary precision, understanding, and consistency
b. formal plans can act as a constraint on the decision-making freedom of managers and supervisors (x)
c. formalization requires the establishment and observance of deadlines for decision-making and planning
d. formalization provides a logical basis for rational flexibility in planning
6. The management of an organization has stated that two members of the same family may not be employed in the same
department. Identify the component of organizational planning that is being demonstrated by management’s action.
11
 a. a strategy
b. a policy (x)
c. an objective
d. a mission statement
7. A company has recently introduced total quality management (TQM). The company’s top management wants to determine a
new and innovative approach to foster total participation throughout the company. Management should
a. seek isolation from all distractions in order to think the problem through
b. bring the employees together for a brainstorming session (x)
c. rely on themselves to develop a new approach
d. use a disciplined problem-solving approach
8. Managers must make decisions in many different situations. A manager must make a subjective decision when the environment
is one in which
a. uncertainty exists (x)
b. risk exists
c. certainty may be achieved
d. probabilities can be calculated
9. Management accounting focuses primarily on providing data for:
a. internal uses by managers. (x)
b. external uses by stockholders and creditors.
c. external uses by the Internal Revenue Service.
d. external uses by the Securities and Exchange Commission.
10. Managerial accounting:
a. is more future oriented than financial accounting. (x0
b. tends to summarize information more than financial accounting
c. is primarily concerned with providing information to external users.
d. is more concerned with precision than timeliness.
11. Compared to financial accounting, managerial accounting places more emphasis on:
A) the flexibility of information. C) Timeliness of information
B) the precision of information. D) Both A and C above (x)
12. The function of management that compares planned results to actual results is known as:
A) planning. C) Controlling (x)
B) directing and motivating. D) Decision-making
13. Which of the functions of management involves overseeing day-to-day activities?
A) planning. C) Controlling
B) directing and motivating. (x) D) Decision-making
14. Which of the following is not one of the three basic activities of a manager?
A) planning. C) Controlling (x)
B) directing and motivating. D) Compiling management accounting
reports (x)
15. The delegation of decision making to lower levels in an organization is known as:
A) the planning and control cycle C) Decentralization (x)
B) controlling. D) None of these
16. .Which of the following statements are false concerning line and staff functions?
I. Persons occupying staff functions have authority over persons occupying line functions.
II. Both line and staff functions are depicted on the organization chart.
III. Line functions are directly related to the basic objectives of an organization.
A) Only I (x) C) Only I and II
B) Only II D) I, II, and III
17. For a hospital, what type of position (line or staff) is each of the following?
Emergency Room Manager Human Resources (Personnel) Manager
A) Staff Staff
B) Staff Line
C) (x) Line Staff
D) Line Line
18. A detailed financial plan for the future is known as a:
A) budget. (x) C) Organizational chart
B) performance report. D) Segment
19. A performance report is:
A) a detailed report comparing budgeted data to actual data for a specific time period. (x)
B) a formal statement of plans for the upcoming period.
C) required to be filed monthly by the Securities and Exchange Commission.
D) not used in decentralized organizations.
20. A clustering of two or more machines at a single workstation is referred to as:
A) a manufacturing cell. (x) C) a functional layout
B) an activity center. D) a setup
21. Ideally, how many units should be produced in a just-in-time manufacturing system?
A) budgeted customer demand for the current week.
B) budgeted customer demand for the following week.
C) actual customer demand for the current week.
D) maximum production capacity for the current week.
22. Process Reengineering includes all of the following steps except:
A) constructing a diagram flowcharting the current process.
B) redesigning the process.
C) elimination of non-value-added activities.
D) elimination of all constraints.
23. According to the Theory of Constraints, improvement efforts should usually be focused on:
A) work centers that are not constraints.
B) the work center that is the constraint.
C) the work center with the highest total cost.
D) the work center with the most obsolete equipment.
24. Which of the following is true regarding the theory of constraints?
A) The theory of constraints does not apply to companies with multiple products because of capacity measurement
difficulties.
B) In any profit-seeking company, there must be at least one constraint.
C) Constraints or bottlenecks stop organizations from selling an infinite number of units or services.
D) both B and C above.

12
25. Accounting is primarily intended to facilitate  
A.  starting a business.
B.  decision making.
C.  ethics investigations.
D.  cost tracing.
26. Which of the following is not a characteristic of financial accounting?  
A.  Financial reports are prepared according to GAAP.
B.  Information is used by external parties.
C.  Information is subjective, relevant and future-oriented.
D.  Reports are prepared periodically.
27. Which of the following is not a characteristic of financial accounting?  
A.  Information is reported at the decision making level.
B.  Information is used by external parties.
C.  Information is objective, reliable and historical.
D.  Reports are prepared periodically.
28. Which of the following is not a characteristic of financial accounting? 
A.  Financial reports are prepared according to GAAP.
B.  Information is used primarily by internal parties.
C.  Information is objective, reliable and historical.
D.  Reports are prepared periodically.
29. Accounting is primarily intended to facilitate  
A.  starting a business.
B.  decision making.
C.  ethics investigations.
D.  cost tracing.
30. Which of the following is not a characteristic of financial accounting?  
A.  Financial reports are prepared according to GAAP.
B.  Information is used by external parties.
C.  Information is subjective, relevant and future-oriented.
D.  Reports are prepared periodically.
31. Which of the following is not a characteristic of financial accounting?  
A.  Information is reported at the decision making level.
B.  Information is used by external parties.
C.  Information is objective, reliable and historical.
D.  Reports are prepared periodically.
32. Which of the following is not a characteristic of financial accounting? 
A.  Financial reports are prepared according to GAAP.
B.  Information is used primarily by internal parties.
C.  Information is objective, reliable and historical.
D.  Reports are prepared periodically.
 33. Which of the following is not a characteristic of managerial accounting?  
A.  Information is used by internal parties.
B.  Information is subjective, relevant, future-oriented.
C.  Reports are prepared as needed.
D.  Reports are prepared according to GAAP.
34. Which of the following is not a characteristic of managerial accounting? 
A.  Information is used by external parties.
B.  Information is subjective, relevant, future-oriented.
C.  Reports are prepared as needed.
D.  Information is reported at the decision making level.

13