MULTIPLE CHOICE - BELOW IS THE ANSWER KEY

1) The function of providing professional advisory (consulting) services, the primary purpose of which is to improve the client's use of its capabilities and resources to achieve the objectives of the organization.

2) The chief management accounting executive of an organization who is mainly responsible for the accounting aspects of management planning and control. He has to do the function of business management which combines the responsibility for accounting, reporting, measurement, auditing, taxes, operating controls and other related areas.

3) The process of identifying, evaluating, planning, and financing capital investment projects of an organization. It involves capital investment projects which require large sum of outlay and involve a long period of time - longer than the usual cut-off of one year or normal operating cycle.

4) An amount that has to be paid or given up in order to get something and is usually a monetary valuation of (1) effort, (2) material, (3) resources, (4) time and utilities consumed, (5) risks incurred, and (6) opportunity forgone in production and delivery of a good or service.

5) Refers to reports designed to meet the needs of internal users, particularly the managers. It is the application of appropriate techniques and concepts in processing the historical and projected economic data of an entity to assist management in establishing a plan for reasonable economic objectives and in the making of rational decisions with a view towards achieving these objectives.

6) It is the cost of using funds. It is essential in the evaluation of capital investment proposals because it serves as the standard rate with which comparisons are to be made. It is also called by such other names as cut-off rate, minimum desired rate, minimum acceptable rate, target rate, standard rate, and hurdle rate.

7) The organization and coordination of the activities of a business in order to achieve defined objectives. It involves the process of setting and achieving goals through the execution of five basic management functions: planning, organizing, staffing, directing, and controlling; that utilize human, financial, and material resources.

8) Costs that do not change with changing levels of activity or they remain constant regardless of the change in activity level.

9) Refers to reports that are primarily prepared for external users, such as investors, creditors and government regulatory and taxing agencies. Reports, which are called Financial Statements are Statement of Financial Position, Statement of Comprehensive Income, Statement of Cash Flows and Statement of Changes in Equity. Notes to Financial Statements is an integral part of the financial statements.

10) Refers to the income or benefit sacrificed or forgone when an alternative is chosen. It is not found in the financial accounting records however, for decision making purposes, these costs are usually considered relevant.

11) Costs that are carefully (or scientifically) pre-determined costs established by management to be used as a basis for comparison with actual costs and is considered as a reflection of what the management thinks a cost should be.

12) It is a transaction between two or more parties, typically a buyer and a seller, in which goods or services are exchanged for money or other assets.

13) The difference between actual or planned sales volume and break-even sales. It indicates the amount by which actual or planned sales may be reduced without incurring a loss.

14) They are expected future costs, and they are different between decision alternatives. 15) It is the excess of revenue over all the variable costs, and this is the amount available for the recovery of fixed costs and generation of profit.

16) Costs that cannot be described by a single cost behavior pattern and possess both fixed and variable components.

17) The point of activity level (sales volume) where total revenues equal total costs (or expenses), i.e., there is neither profit nor loss.

18) Refers to the non-recoverable costs incurred in the past. It is considered irrelevant for decision making purposes, for aside from being a past cost, they are not expected to change among alternative choices.

19) A system of accounting wherein costs and revenues are accumulated and reported by levels of responsibility or by responsibility centers within the organization.

20) It is a plan, expressed in quantitative terms, on how to acquire and use the resources of an entity during a certain future period of time.

21) It is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision.

22) Costs that change directly and proportionately with the level of activity.

Answer Keys:

a. Accounting

b. Break-even Sales

c. Budget

d. Capital Budgeting

e. Contribution Margin

f. Controller

g. Cost

h. Cost Center

i. Cost of Capital

j. Differential Costs

k. Financial Accounting

l. Financial Statement Analysis

m. Fixed Costs

n. Management

o. Management Accounting

p. Management Advisory Services

q. Margin of Safety

r. Mixed Costs

s. Normal Capacity

t. Opportunity Costs

u. Relevant costs

v. Responsibility Accounting

w. Sale

x. Standard Costs

y. Sunk Costs

z. Variable Costs