Question 1

Short-term operating decisions can be translated into a budget, which is a plan of action expressed in monetary terms that compels management to look ahead and coordinate their activities.

Accepted Answer

Short-term operating decisions are often translated into budgets, which help management plan ahead and coordinate their activities by expressing their plan of action in monetary terms.

Question 2

The determination of objectives and expressing how they are to be attained are together referred to as the planning process.

Accepted Answer

This statement is true. The planning process involves setting objectives and determining the best way to achieve them.

Question 3

The Australian Customs and Border Protection Service and the Australian Taxation Office have a statutory right of access to internal accounting information.

Accepted Answer

The Australian Customs and Border Protection Service and the Australian Taxation Office have a statutory right of access to internal accounting information under the Customs Act 1901 and the Taxation Administration Act 1953.

Question 4

The cost-benefit approach is often used to evaluate the net benefits of alternative accounting information systems.

Accepted Answer

The cost-benefit approach is commonly used to assess the potential gains and drawbacks of various accounting systems, and to determine if the benefits are worth the costs involved in implementing and operating them.

Question 5

A control system is limited in its application, as it depends on the motivation of individuals.

Accepted Answer

A control system can only be effective if individuals are motivated to comply with its regulations and guidelines. If individuals are not motivated, they may disregard the system, rendering it ineffective. Therefore, the application of a control system is limited by the motivation of individuals.

Question 6

A major difference between strategic and operating decisions is that the former focus on the long-term policies of the firm, whereas operating decisions focus on the short-term use of resources.

Accepted Answer

Strategic decisions are made with a long-term perspective, such as developing new products or entering new markets. Operating decisions, on the other hand, deal with the day-to-day operations of the company and focus on the short-term use of resources to achieve specific goals.

Question 7

The efficiency and effectiveness of a control system can be affected by the costs associated with running the system.

Accepted Answer

The costs associated with running a control system, such as maintenance, staffing, and equipment, can impact its efficiency and effectiveness. For example, if a control system is too costly to operate, it may not be used to its full potential or may not be maintained properly, leading to errors and inefficiencies. Additionally, if a control system is not cost-effective, it may not be worth implementing in the first place.

Question 8

A major requirement of managers is to have detailed and timely information that enables them to monitor results and compare with plans and budgets, in order to take appropriate action for the future direction of the company.

Accepted Answer

Managers need detailed and timely information to monitor results and make informed decisions about the future direction of the company. This information is essential for comparing actual performance with plans and budgets and taking appropriate action to address any deviations or problems that arise.

Question 9

Organisational size and structure are major influences on the information needs of managers.

Accepted Answer

Organisational size and structure play a crucial role in determining the amount and type of information that managers require to make informed decisions. Large organizations typically have more complex structures and greater levels of hierarchy, which can create challenges in managing information efficiently. On the other hand, small organizations may have simpler structures, but the information needs of managers may be more varied and less clearly defined. Understanding the information needs of managers is an essential aspect of effective decision-making and can help organizations stay competitive and responsive to changing market conditions.

Question 10

In order for a banker to make judgements about the future needs and prospects of an entity in deciding whether to lend money, additional detailed information in the form of future cash flows may be required.

Accepted Answer

Future cash flows can provide insight into the ability of an entity to generate revenue and meet debt obligations, which is crucial information for a banker when evaluating the risk level of a potential loan.

Question 11

In supplying external users with additional accounting information, there is a need to balance the costs and benefits of supplying that information, but this does not apply to internal users such as managers because the information is already available and does not incur any additional costs.

Accepted Answer

While it is true that internal users such as managers have access to information within the organization, there may still be costs associated with compiling and presenting that information in a useful format. Additionally, the benefits of providing relevant and timely information to decision-makers within the organization can outweigh any costs incurred.

Question 12

If bankers are to make judgements about the future needs and prospects of the entity, they are likely to require information on projected cash flow statements, statements of comprehensive income and details of any other loans the company may have.

Accepted Answer

Bankers need information on projected cash flow, comprehensive income statement, and any other loans to make judgments about the future needs and prospects of the entity.

Question 13

A desired outcome of setting objectives in the planning process is to create criteria for assessing alternative business options.

Accepted Answer

Setting clear objectives helps a business to identify alternative options and measure their effectiveness against predetermined criteria.

Question 14

Bankers have a statutory right of access to internal accounting information.

Accepted Answer

Bankers do not have a statutory right of access to a company's internal accounting information; access is typically granted based on the terms of a loan agreement or with the company's consent.

Question 15

Strategic decisions are decisions that focus on the efficient use of the resources available to the firm in the short term.

Accepted Answer

Strategic decisions focus on the long-term goals of the firm and involve the allocation of resources over a longer period of time.

Question 16

In a dynamic economic environment, there is often the need to revise operating decisions in order to meet long-term objectives, but this will not impact on strategic decisions as these are related to policy changes and are not affected by operating decisions.

Accepted Answer

In a dynamic economic environment, strategic decisions may also need to be revised based on changes in market conditions, competition, and other factors. Strategic decisions are not set in stone and can be adapted over time, just like operating decisions.

Question 17

A company's results are judged against some expectations, which may be rough plans or detailed budgets.

Accepted Answer

A company's performance is usually compared to some form of expectations, which can include rough plans or detailed budgets. These expectations may be based on past performance, market conditions, or other factors.

Question 18

The monitoring process allows corrective action to be planned and taken after comparing actual performance with a predetermined plan.

Accepted Answer

The purpose of monitoring is to compare actual performance with a predetermined plan and identifies any deviations. This allows corrective action to be planned and taken promptly, which means monitoring is an essential part of the control process. Therefore, the given statement is true.

Question 19

Many benefits associated with an information system are qualitative in nature.

Accepted Answer

Qualitative benefits are those that cannot be easily measured in monetary terms, such as enhanced decision-making capabilities or improved customer satisfaction. These benefits are often subjective and rely on the experiences and perceptions of the users.

Question 20

Detailed financial information is only generally available to managers and a limited number of external users, as it normally contains sensitive information that may be detrimental to the company if made publicly available.

Accepted Answer

Detailed financial information is considered confidential and only disclosed to managers and a limited number of external stakeholders such as investors, creditors, and analysts who are bound by confidentiality agreements. This is to prevent any misuse or misinterpretation of the information that could harm the company's interests.

Quiz 12: An Introduction to Management Accounting: a Strategic Perspective