Managerial Accounting exercises
EXERCISES Group A E1-13A Managers' responsibilities (Learning Objective 1) Categorize each of the following activities according to which management responsibility it fulfills: planning, directing, controlling, or decision making. Some activities may fulfill more than one responsibility. a. Management conducts variance analysis by comparing budget to actual. b. Management reviews hourly sales reports to determine the level of staffing needed to service customers. c. Management decides to increase sales by 10% next year. d. Management uses information on product costs to determine sales prices. e. To lower product costs, management moves production to Mexico. E1-14A Define key terms (Learning Objectives 1 & 2) Complete the following statements with one of the terms listed here. You may use a term more than once, and some terms may not be used at all. Budget Creditors Managerial accounting Planning Controlling Financial accounting Managers Shareholders a. Companies must follow IFRS or ASPE in their systems. b. Financial accounting develops reports for external parties such as and c. When managers evaluate the company's performance compared to the plan, they are performing the responsibility of management. are decision makers inside a company. e. provides information on a company's past performance to external parties. systems are not restricted by IFRS or ASPE but are chosen by comparing the costs and the benefits of the system. g. Choosing goals and the means to achieve them is the _ _ function of management. h. systems report on various segments or business units of the company. statements of public companies are audited annually by public accountants. E1-15A Identify users of accounting information (Learning Objective 3) For each of the following users of financial accounting information and managerial account- ing information, specify whether the user would primarily use financial accounting informa- tion, managerial accounting information, or both. 1. Potential shareholders 2. Loar officer at the company's bank 3. Manager of the Sales Department 4. Bookkeeping Department 5. Managers at regional offices 6. Canada Revenue Agency agent 7. Current shareholders B. Toronto Stock Exchange analyst 9. News reporter 10. Company controller 11. Board of directors 12. Nova Scotia Securities Commission employee 13. External auditor (public accounting firm) 14. Internal auditor E1-164 Classify roles within the organization (Learning Objective 3) Complete the following statements with one of the terms listed here. You may use a term more than once, and some terms may not be used at all. Audit committee Board of directors CEO CFO Treasurer Controller Cross-functional teams COOPTER 1 a. The and the report to the CEO. and the b. The internal audit function reports to the CFO or is directly responsible for financial accounting, managerial accounting, a c. The tax reporting. d. The CEO is hired by the is directly responsible for raising capital and investing funds. e. The f. The is directly responsible for the company's operations. . Management accountants often work with h. A subcommittee of the board of directors is called the E1-17A Professional organizations and certification (Learning Objective 4) Describe areas of focus in contemporary managerial accounting. E1-18A Ethical dilemma (Learning Objective 4) Mary Gonzales is the controller at CarTown, a car dealership. She recently hired Anik Cousineau as a bookkeeper. Cousineau wanted to attend a class on Excel spreadsheets, so Gonzales temporarily took over Cousineau's duties, including overseeing a fund for topping off a car's gas tank before a test drive. Gonzales found a shortage in this fund and con- fronted Cousineau when she returned to work. Cousineau admitted that she occasionally uses this fund to pay for her own gas. Gonzales estimated that the amount involved is close to $300. Requirements 1. What should Gonzales do? 2. Would you change your answer to the previous question if Gonzales was the one recently hired as controller and Cousineau was a well-liked, long-time employee who indicated that she always eventually repaid the fund? E1-19A Classify ethical responsibilities (Learning Objective 4) Comment on each of the following responsibilities to which a professional accountant should adhere. How do they relate to ethical practice? 1. Refrain from using confidential information for unethical or illegal advantage. 2. Maintain an appropriate level of professional expertise by continually developing knowl- edge and skills. 3. Communicate information fairly and objectively. 4. Recognize and communicate professional limitations that would preclude responsible judgment or successful performance of an activity. 5. Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts. 6. Provide decision support information and recommendations that are accurate, clear, concise, and timely. profession. 7. Abstain from engaging in or supporting any activity that might discredit the B. Disclose all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations. 9. Inform all relevant parties regarding the appropriate use of confidential information. Monitor subordinates' activities to ensure compliance. cal standards. 10. Perform professional duties in accordance with relevant laws, regulations, and techni- ethically. 11. Refrain from engaging in any conduct that would make it difficult to carry out duties required. 12. Keep information confidential except when disclosure is authorized or legally 13. Disclose delays or deficiencies in information, timeliness, processing, or internal con- trols in conformance with organization policy and/or applicable law. E1-204 Define key terms (Learning Objective 5) Complete the following statements with one of the terms listed here. You may use a term more than once, and some terms may not be used at all.Introduction to Managerial Accounting E-commerce Shift to service economy Future Sarbanes-Oxley Act of 2002 Just in time ISO 9001:2008 Present Lean production Supply chain management IFRS ERP Cross-functional teams Total quality management XBRL _ is a language that uses a standardized coding system companies use to tag each piece of financial and business information in a format that can be quickly and efficiently accessed over the internet. b. involves the exchange of information with suppliers to reduce costs, improve quality, and speed delivery of goods and services from suppliers to the company and its customers. c. The was enacted to restore trust in publicly traded corporations, their management, their financial statements, and their auditors. d. The goal of is to meet customers' expectations by providing them with superior products and services by eliminating defects and waste throughout the value chain. e. Most of the costs of adopting ERP, expanding into a foreign market, or improving quality are incurred in the _ : but most of the benefits occur in the serves the information needs of people in accounting as well as people in mar- keting and in the warehouse E. Firms adopt to conduct business on the internet. h. Firms acquire the certification to demonstrate their commitment to quality. is a philosophy that embraces the concept that the lower the company's waste, the lower the company's costs. is a data-tagging system that enables companies to release financial and business information in a format that can be quickly, efficiently, and cost-effectively accessed, sorted, and analyzed over the internet. k. Canadian companies were expected to adopt for all publicly traded companies by 2011, which differs from the ASPE that companies are currently required to use. I. Toyota first pioneered an inventory philosophy in which a product is manufactured to fill customer orders; companies are able to substantially reduce the quantity of raw materials and finished goods inventories. m. is a management philosophy of delighting customers with superior products and services by continually setting higher goals and improving the performance of every business function. E1-214 Summarize the Sarbanes-Oxley Act (Learning Objective 5) You just obtained an entry-level job as a management accountant at an international firm based in Winnipeg. Other newly hired accountants have heard of the Sarbanes-Oxley Act of 2002 (SOX) but do not know much about it. (They attended a different university.) Write a short memo to your colleagues discussing the reason for SOX, some of the specific require- ments of SOX that will affect your company, and why this is applicable to the Canadian firm that you work for
