1. Chapter 1 Introduction to Management Accounting
Test

2. How should managers deal with risk when setting objectives?
Balance it against likely returns
Avoid it
Accept it as inevitable
Minimise it
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3. In recent decades which one of the following has not resulted in the business environment becoming more turbulent and competitive?
Rapid changes in technology
Increasing pressure from owners for economic returns
Increasing sophistication of customers
Increasing regulation of domestic markets
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4. A key difference between management and financial accounting is that the former tends to ….
Be forward looking
Have longer reporting intervals
Rely more on objective verifiable evidence
Be more general purpose
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5. Which qualitative characteristic is more closely associated with the confirmation of past events and prediction of future events?
understandability
relevance
comparability
reliability
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6. According to Peter Drucker, what is the purpose of a business?
To satisfy the needs of all those with a stake in the business
To enhance shareholder wealth
To create and keep a customer
To maximise profits
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7. Which of the following is not a user of Financial Statements?
government
customers
management
suppliers
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8. Which one of the following is not the task of the board of directors?
Monitoring the business on a day to day basis
Monitoring and controlling business activities
Communicating with shareholders
Setting business objectives and strategy
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9. The key financial objective of a business is to be the enhancement/ maximisation of :
Profit
Owners’ wealth
Return on investment
Sales revenue
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10. There are four qualitative characteristics that influence the usefulness of management accounting; these include relevance, reliability and comparability, which is the fourth?
timeliness
understandability
objectivity
accuracy
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11. Management accounting information should be produced until the point where:
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The value of information can no longer be quantified in monetary terms
The cost of information is minimised
The value of information to users is maximised
The cost of providing it is no longer less that the benefits

12. Which user group has most control over the range and content of information it receives?
managers
lenders
suppliers
Investment analysts
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13. As a management accountant you would be more concerned with:
The annual reporting of performance
Preparing plans and forecasts of future activity
Reporting of past data
Providing information to shareholders on management performance
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14. Which one of the following is not an area of decision making where management accounting information is required?
Developing plans and objectives
Evaluating share price information
Allocating resources
Determining costs and benefits
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15. In which phase of the development of management accounting was there a concern for customers needs?