Question 1

Examining past performance is not involved in control decisions.

Accepted Answer

Examining past performance is a crucial factor in control decisions as it helps in identifying areas that need improvement and making necessary adjustments to achieve organizational goals.

Question 2

The planning and control cycle is a long-term cycle normally taking months to complete.

Accepted Answer

The planning and control cycle can vary in duration, often being a continuous process that includes both short-term and long-term planning and control activities, not limited to a timeframe of months.

Question 3

Decisions that best attain individual goals may not necessarily agree with the organization's goal of maximizing profit.

Accepted Answer

Individual goals may prioritize personal well-being or job satisfaction over maximizing profit, while maximizing profit is typically the primary goal of an organization.

Question 4

Unlike individuals whose goals might have several factors, organizations tend to have focused goals.

Accepted Answer

Organizations generally have a clear mission statement and specific objectives that they aim to achieve, which leads to a more focused set of goals.

Question 5

The primary role of accounting is to help measure the costs and benefits of decision options.

Accepted Answer

Accounting provides financial information that helps decision-makers evaluate the costs and benefits of various options and select the most profitable one.

Question 6

Business decisions generally have few options.

Accepted Answer

Business decisions can have multiple options and it's important to consider and evaluate all of them before making a final decision.

Question 7

Every option in making a decision presents a unique trade-off between benefits and costs.

Accepted Answer

Every decision involves selecting between different options, which inevitably have differing benefits and costs. Choosing one option over another involves weighing the potential gains against the potential drawbacks, and recognizing that every option comes with its own set of trade-offs.

Question 8

Understanding finance is not crucial to organizations when identifying the costs and benefits of funding operations in different ways.

Accepted Answer

Understanding finance is crucial to organizations when identifying the costs and benefits of funding operations in different ways. It helps them make informed decisions about financial strategies, budgeting, investing, and risk management. Without finance knowledge, organizations may make poor financial decisions that could lead to financial distress or failure.

Question 9

Control decisions relate to motivating, monitoring, and evaluating performance.

Accepted Answer

Control decisions are a part of the management process that involves motivating employees to meet performance goals, monitoring their progress, and evaluating their outcomes.

Question 10

Firms satisfy the information needs of external makers by issuing a comprehensive set of financial statements at regular intervals that relate to the firm as a whole.

Accepted Answer

Financial statements such as balance sheet, income statement, and cash flow statement provide information about the overall financial position and performance of the firm to external users like investors, creditors, and suppliers.

Question 11

Ethics relate primarily to the decision-making step of the Decision Framework.

Accepted Answer

Ethics relate to all steps of the Decision Framework, not just the decision-making step. They influence how problems are identified, options are generated and evaluated, and how decisions are implemented and reviewed.

Question 12

The planning and control cycle includes planning, implementing, evaluating, and revising.

Accepted Answer

The planning and control cycle is a continuous process that involves planning, implementing, evaluating, and revising to ensure goals and objectives are met.

Question 13

Planning decisions relate to choices about acquiring and using resources to deliver products and services to customers.

Accepted Answer

Planning decisions involve making choices about how to obtain and allocate resources to produce and provide products and services to customers.

Question 14

The Foreign Corrupt Practices Act of 1977 prohibits managers from giving or taking bribes unless such acts are part of the normal business practices in another country.

Accepted Answer

The Foreign Corrupt Practices Act of 1977 prohibits managers from giving or taking bribes, regardless of whether such acts are part of the normal business practices in another country.

Question 15

A for-profit business usually specifies organizational goals according to profit motive.

Accepted Answer

The answer of A for-profit business usually specifies organizational goals...

Question 16

To accomplish their goals, organizations not only need to allocate resources effectively, but also need to motivate employees to focus on organizational goals.

Accepted Answer

Motivated employees are important for organizations to achieve their goals because they are more likely to be productive, creative, and committed to the organization's mission. Effective resource allocation is necessary but insufficient for success in achieving goals.

Question 17

In the United States, firms follow Generally Accepted Accounting Principles (GAAP) as defined by the Financial Accounting Standards Board when preparing their financial statements.

Accepted Answer

In the United States, firms are required to follow GAAP as defined by the Financial Accounting Standards Board when preparing their financial statements.

Question 18

The value of an option must always be expressed in monetary terms.

Accepted Answer

The value of an option can be expressed in terms of its intrinsic value and time value, which are not solely monetary but also depend on factors like the underlying asset's price, volatility, time until expiration, and interest rates.

Question 19

The Decision Framework applies to all business-related decisions, but not to personal decisions.

Accepted Answer

The Decision Framework applies not only to business-related decisions but also to personal decisions. It can be used in any situation where a decision needs to be made.

Question 20

Managerial accounting aims to satisfy the information needs of decision makers outside the firm.

Accepted Answer

Managerial accounting is focused on providing financial information to decision makers within a company, such as managers and executives. Therefore, it aims to satisfy the information needs of decision makers inside the firm, not outside of it.

Quiz 1: Accounting: Information for Decision Making