1. Sunk costs are:
a. opportunity cost.
b. costs that will occur in the future.
c. not relevant.
d. costs that can be avoided.
2. Which of the following is an example of an internal user of accounting information?
a. Suppliers
b. Creditors
c. Managers
d. Federal tax agency
3. A company's decision on where to locate a new factory is most likely a result of:
a. operating activities.
b. operational planning.
c. strategic planning.
d. controlling activities.
4. An example of quantitative data is:
a. company reputation.
b. number of customer complaints.
c. Employee satisfaction.
d. product quality.
5. Which of the following statements is true regarding ethics in decision-making?
a. Since most business decisions are simply a matter of economics, ethical considerations should be ignored.
b. Decision-making can have an ethical as well as an economic impact.
c. Managerial accountants do not face ethical issues.
d. Business managers will always agree on ethical choices.
6. An example of qualitative data is:
a. warranty claims.
b. customer satisfaction.
c. net income.
d. budgeted hours.
7. Which of the following statements about decision-making is true?
a. Risk should not be taken into account.
b. Objectives should be quantitative and not qualitative.
c. Opportunity cost should be considered.
d. Sunk costs should usually be taken into account.
8. Mary Ann is trying to decide whether to fly to Florida or New York. The cost of her ticket will be the same either way. The cost of the ticket is an example of:
a. sunk cost.
b. opportunity cost.
c. avoidable cost.
d. irrelevant cost.
9. All of the following are examples of operating activities except:
a. decisions on whether or not to schedule overtime for employees.
b. decisions on what price to charge for a product.
c. decisions on whether or not to accept a special order.
d. decisions on whether actual outcomes were similar to desired outcomes.
10. The primary role of today's managerial accountant is to:
a. enter data into the accounting system.
b. collect data.
c. analyze information and create knowledge.
d. prepare tax returns.
11. Relevant costs are costs that:
a. do not differ between alternatives.
b. may not be eliminated by choosing one alternative over another.
c. have already been incurred.
d. differ between alternatives.
12. Which of the following statements is true?
a. External and internal users of accounting information have exactly the same information needs.
b. Financial accounting is less flexible than managerial accounting.
c. Managerial accounting provides the best information to external users.
d. Managerial accounting emphasizes on the organization as a whole more than financial accounting.
13. Decision-makers should consider:
a. only qualitative factors.
b. only quantitative factors.
c. both quantitative and qualitative factors.
d. only sunk costs.
14. Which of the following should not be taken into account in decision-making?
a. Risk
b. Ethical considerations
c. Irrelevant costs
d. Opportunity costs
15. The main focus of managerial accounting is:
a. decision making.
b. the preparation of financial statements.
c. the preparation of budgets.
d. documenting cash flows.