Accounting & Auditing
Branches of Accounting
Performance measurement by divisions and departments is closely related to:
A. Bookkeeping only
B. Management accounting
C. Fiduciary accounting
D. Tax accounting
Correct Answer: B
Management accounting evaluates organizational units and managers.
Accounting & Auditing
Branches of Accounting
Which statement best describes confidentiality of management accounting reports?
A. They cannot contain forecasts
B. They must always be published
C. They are usually intended for internal use
D. They are automatically court evidence
Correct Answer: C
Management reports are generally internal and confidential.
Accounting & Auditing
Branches of Accounting
Management accounting may use non-financial information such as:
A. Only dividend declarations
B. Only taxable income
C. Only audited profit
D. Units produced and defect rates
Correct Answer: D
Management accounting often combines financial and operational measures.
Accounting & Auditing
Branches of Accounting
A flexible budget is primarily used in:
A. Management accounting
B. Fiduciary accounting
C. Forensic accounting
D. International accounting
Correct Answer: A
Flexible budgets support internal planning and control at different activity levels.
Accounting & Auditing
Branches of Accounting
Which branch helps management select among alternative courses of action?
A. Fiduciary accounting
B. Management accounting
C. Financial accounting only
D. Social accounting only
Correct Answer: B
Decision analysis is a central management accounting function.
Accounting & Auditing
Branches of Accounting
A make-or-buy decision is most directly supported by:
A. Governmental accounting only
B. Management accounting
C. Fiduciary accounting
D. Bookkeeping only
Correct Answer: B
Management accounting provides relevant cost and qualitative information for make-or-buy decisions.
Accounting & Auditing
Branches of Accounting
Which report is most likely a management accounting report?
A. Income tax return
B. Departmental budget variance report
C. Independent auditor's report
D. Published statement of financial position
Correct Answer: B
Budget variance reports support internal control and performance management.
Accounting & Auditing
Branches of Accounting
Unlike financial accounting, management accounting reports are generally:
A. Not required to follow a single prescribed external format
B. Always published to the public
C. Required to use one statutory format
D. Prepared only in cash terms
Correct Answer: A
Internal reports can be designed to meet management needs.
Accounting & Auditing
Branches of Accounting
Management accounting is generally:
A. Limited to tax statutes
B. Prepared only once a year
C. Forward-looking as well as historical
D. Restricted to historical figures only
Correct Answer: C
Management accounting often combines past data with forecasts and estimates.
Accounting & Auditing
Branches of Accounting
Which activity is most closely associated with management accounting?
A. Preparing a trust account
B. Budgeting
C. Filing only a tax return
D. Issuing an audit opinion
Correct Answer: B
Budgeting is a major management accounting tool.
Accounting & Auditing
Branches of Accounting
Management accounting information is prepared primarily for:
A. Courts only
B. Internal managers
C. Tax authorities only
D. External shareholders only
Correct Answer: B
Management accounting supports internal planning, control, and decision-making.
Accounting & Auditing
Branches of Accounting
Which branch is most appropriate for determining accounting profit reported to shareholders?
A. Tax accounting only
B. Forensic accounting
C. Environmental accounting only
D. Financial accounting
Correct Answer: D
Accounting profit for external reporting is determined under financial accounting rules.
Accounting & Auditing
Branches of Accounting
Financial accounting normally reports information about:
A. The entity as a whole and required reportable components
B. Only future advertising campaigns
C. Only one production worker
D. Only criminal investigations
Correct Answer: A
Financial accounting focuses on the reporting entity and relevant segments/disclosures required by standards.
Accounting & Auditing
Branches of Accounting
A balance sheet is another common name for the:
A. Statement of financial position
B. Cash budget
C. Income statement
D. Cost sheet
Correct Answer: A
The statement of financial position has traditionally been called the balance sheet.
Accounting & Auditing
Branches of Accounting
Which branch is most concerned with recognition, measurement, presentation, and disclosure in general-purpose financial statements?
A. Tax accounting
B. Forensic accounting
C. Human resource accounting
D. Financial accounting
Correct Answer: D
These are central financial reporting activities.
Accounting & Auditing
Branches of Accounting
An annual report prepared for shareholders is mainly an output of:
A. Responsibility accounting
B. Cost accounting
C. Financial accounting
D. Project accounting
Correct Answer: C
Annual external reporting is a core financial accounting function.
Accounting & Auditing
Branches of Accounting
Which statement best distinguishes financial accounting from bookkeeping?
A. Financial accounting excludes transaction records
B. Bookkeeping prepares all external standards
C. Financial accounting includes reporting and interpretation in addition to recording
D. They have no relationship
Correct Answer: C
Bookkeeping records transactions, while financial accounting extends to summarizing and reporting them.
Accounting & Auditing
Branches of Accounting
Financial accounting commonly uses the double-entry system to:
A. Record the dual effect of transactions
B. Calculate only taxes
C. Investigate fraud only
D. Assign employee responsibility
Correct Answer: A
Double entry records equal debit and credit effects of transactions.
Accounting & Auditing
Branches of Accounting
Which principle is most closely associated with financial accounting rather than management accounting?
A. Only verbal communication
B. No need for documentation
C. Complete freedom from reporting conventions
D. Compliance with applicable external reporting standards
Correct Answer: D
Financial accounting is governed by external reporting frameworks.
Accounting & Auditing
Branches of Accounting
Financial accounting reports are usually prepared:
A. Only for tax audits
B. Only when managers request them hourly
C. Only after a fraud occurs
D. For defined reporting periods
Correct Answer: D
External financial statements are normally prepared for periodic reporting intervals.