Chapter 1: The role of accounting information in management decision making True/False questions 1. A vision statement is a theoretical description of what an organisation should become. 2. An organisational vision is a short term plan for maximizing financial results. 3. Most organisations have one stakeholder 4. Organisational core competencies unrelated to the organizational vision. 5. Organisational strategies are the same as operating plans. 6. The starting point for managerial decisions is monitoring actual operations 7. Desirable employee behaviour can be motivated by trying employee performance evaluation and pay to long term or short term results. 8. Organisational information systems only collect accounting information 9. Cost accounting information is used for both management accounting and financial accounting activities. 10. Management accounting is the process of gathering, summarizing and reporting financial and non-financial information used internally to make decisions 11. Intellectual capital is a type of financial resource that is captured by the organisation's information system 12. It is easy to differentiate between internal and external reports. 13. The design of the management accounting system structure is influenced by both external and internal factors. 14. Technological advances have allowed management accountants to develop previously infeasible cost and management accounting systems. 15. GAAP stands for Generally Agreed Accounting Practices 16. Only large established organisations require a management accounting function. 17. Relevant information helps decision makers evaluate and choose between alternative courses of action. 18. Relevant information relates to events that happened in the past and is therefore quantifiable and accurate. el 19. Higher quality information is more certain, complete, relevant, timely and valuable. 20. The use of sophisticated information systems means that uncertainty is eliminated. 21. Opportunity costs are the benefits forgone when we choose one alternative over the next best alternative. 22. Cost-benefit analysis means that all decisions will provide a financial benefit to the organisation 23. Tuition fees are an opportunity cost of earning a university degree. 24. High quality information will generally have fewer uncertainties if it is based on viable assumptions. Multiple-choice questions 44. Which of the following influences organisational strategies? a. Tax rates b. Financial statement results c. Organisational vision d. Number of employees LO 1 45. Which of the following statements regarding organisational vision is false? a. b. c. d. Organisational vision is the same as operating plans Organisational vision is one tool for expressing an organisation's main purpose Organisational vision should be communicated to all employees Managers sometimes divide the organisational vision into one or more written statements LO 1 46. An organisational vision is sometimes broken down into: I Mission statement II Core values statement III Code of conduct IV Statement of Stakeholders a. I only b. I and II only c. I, II, and III d. I, II and IV only LO 1 47. Organisational core competencies can include: A mission statement a. b. c. d. Favourable economic conditions in the external environment A code of conduct An innovative product design LO 1