MA1 - C1 - Q2

The following statements relate to financial accounting and to management accounting:

(i) The main users of financial accounting information are external to the organization

(ii) Management accounting is that part of financial accounting which records the cash received and payments made by an organization

Which statements are correct?

• Neither statement is true

• Statement (ii) only is true

• Both statement are true

• Statement (i) only is true

A cost centre is:

• A production or service location, function, activity or item of equipment for which costs are accumulated

• A unit of product or service in relation to which costs are ascertained

• An amount of expenditure attributable to an activity

• A centre for which an individual budget is drawn up

Which TWO of the following statements about cost, management and financial accounting are true?

• Management accounting information must be prepared in accordance with legal requirements

• Management accounting provides information for decision-making, planning, control and performance evaluation

• Cost accounting can be used for inventory valuation to meet the needs of both internal reporting and external reporting

• Financial accounting information is mainly prepared for internal users

Tom Hopkin is responsible for managing the volume, quality and cost of production within his responsibility centre. What type of responsibility centre does Tom manage?

• Strategic business unit

• Investment centre

• Profit centre

• Cost centre

The following statements relate to management accounting:

(i) They are used to aid planning, control and decision making

(ii) They must be produced in a prescribed format

(iii) There is a legal requirement for most companies to produce them annually

• (i) only

• (i) and (iii)

• (i), (ii) and (iii)

• (ii) and (iii)

Management accounting may be

(i) a historical record

(ii) a future planning tool

(iii) provided in non-monetary format

• (ii) only

• (ii) and (iii)

• (i) and (ii)

• (i), (ii) and (iii)

Cost accounting and management accounting are items which are interchangeable. Is this answer TRUE or FALSE?

• True

• False

Which THREE of the following are limitations of information found on the internet?

• The information may not be tailored for the exact purpose for which it is required

• There is so much information that there is a danger of information overload

• The information is cheap and easy to acquire

• The source of the information may not be reliable

Which TWO of the following are limitations of management information in providing guidance for managerial decision making?

• It is usually based on what has happened in the past

• It does not take account of external factors effecting the business

• It is not set out in a legally prescribed format

• It may be stated in monetary and non-monetary terms

Figures relating to a training organization are as follows:

% of first time student passed the final exam: 98%

Does the figures provide the training organization with data or information?