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SMA M2 – Module Quiz 1 (Parts A & B)

YOU SCORED 8 OUT OF A POSSIBLE 10 [80%]

Question 1 Marks: 0
For organisations that are voluntarily providing CSR and Integrated reporting with their Financial Statements, how might a Management Accountant assist in
this process?

Answer Options
You answered C. The correct answer is D
USER SELECTION CORRECT ANSWER

Preparation of Financial Statements would be performed exclusively by Financial Accountants - a Management Accountant would not be involved
A
in this task.

Management Accountants are best placed to provide commentary on the Financial Statements, and they would typically prepare the detailed
B
notes to the financial statements.

Management Accountants would work alongside Financial Accountants to ensure that budget variances are understood and can be explained to
C
relevant stakeholders.

D Management Accountants would be best placed to contribute to non-financial reporting on areas relating to environmental and social matters.

Answer Explanation

D is correct because Management Accountants are typically more familiar with non-financial information than Financial Accountants. So they are well placed
to classify and report on business activities from a social and environmental perspective, not just financial.

Module: 2 > Part: A > The information needs of stakeholders > Corporate social responsibility/integrated reporting > Page:
49

Question 2 Marks: 1
Harry is working on a project that seeks to provide detailed analysis and reporting on employees of the sales team. William has recently joined the company
as a junior sales executive, and is concerned about the additional scrutiny that will be applied to his performance.

Using Mendelow’s Stakeholder Grid, how would you classify Willam?

Answer Options
You answered B. The correct answer is B
USER SELECTION CORRECT ANSWER

A Low Power / Low Interest

B Low Power / High Interest

C High Power / Low Interest

D High Power / High Interest

Answer Explanation

B is correct because William will be impacted by the project, so his interest would be considered 'high'. However as he is a relatively junior employee, he
would not hold much power in the organisation, so his power level would be 'low'.

Module: 2 > Part: A > Stakeholder risk management > Stakeholder grid > Page: 50

Question 3 Marks: 1

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Which type of information system aims to capture an organisation’s internal transactional, accounting, customer, supplier and other forms of data into a single
standalone system?

Answer Options
You answered C. The correct answer is C

USER SELECTION CORRECT ANSWER

A Decision Support System (DSS)

B Management Accounting System (MAS)

C Enterprise Resource Planning System (ERP)

D Customer Relationship Management System (CRM)

Answer Explanation

C is correct because an ERP is a single system that captures data relating to a wide range of business activities, such as inventory, accounting, customers,
suppliers, and production planning.

A is incorrect because a DSS goes beyond capturing internal data - it also connects to external sources and is used for complex modelling purposes.

B is incorrect because a MAS will capture accounting data and can link to other systems. But it is typically less complex than an ERP, and requires integration
with other data sources.

D is incorrect because a CRM relates to customer data only, it typically doesn't capture the other data sources.

Module: 2 > Part: B > Different types of information systems > Internal stakeholders > Page: 57-59

Question 4 Marks: 1
GrowIt! is a wholesale nursery that produces vegetable seedlings and sells them to nurseries. They are keen to capture more detail and better understand
their sales numbers.

Which of the following types of data would allow them to ‘drill down’ into their sales totals at a more granular level?

Answer Options
You answered D. The correct answer is D
USER SELECTION CORRECT ANSWER

A Customer order history

B Remaining inventory levels

C Days taken until settlement

D The type and quantity of vegetable sold

Answer Explanation

D is correct because being able to drill down into product level sales would be useful information for management to know, and as all sales will relate to a
product, it is achievable.

A, B and C are useful to know in other contexts, but they are not fields that would allow a user to drill down into a Sales report.

Module: 2 > Part: A > Different Types of Information Systems > Management Accounting Systems > Page: 58

Question 5 Marks: 1
Which of the following statements regarding the source of information is correct?

Answer Options

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You answered A. The correct answer is A

Management accountants should consider the limitations of any financial and non-financial information that they source and use in their
A
reporting.

Primary sources of information are always preferable to secondary sources as they are gathered within the organisation and the validity is
B
therefore guaranteed.

C Validity is a measure of reliability, and it relates to how much reliance can be placed on the information in question.

Information sourced from a credible government agency will typically have a high degree of accuracy and will therefore be relevant for
D
management accounting purposes.

Answer Explanation

A is correct because all information can have limitations, so this needs to be considered by the management accountant.

B is not correct because internally sourced information may still be inaccurate, or it might lack the detail required for a particular purpose.

C is not correct because validity actually relates to accuracy, not reliability.

D is not correct because validity (or accuracy) does not guarantee relevance. For example, the information may not be relevant to the organisation in
question, or it might be historic and not take into account more recent trends.

Module: 2 > Part: B > Characteristics and limitations of different kinds of information > Dimensions of information > Page:
63-64

Question 6 Marks: 1
SellYRGoods Pty Ltd (SellYRGoods) is a merchandising organisation that sells on credit. The regional managers have asked Brenda Thomson, the
management accountant at SellYRGoods, to provide them with detailed financial information about customer sales.

Which of the following would be most useful for Brenda to provide to the managers?

Answer Options
You answered B. The correct answer is B
USER SELECTION CORRECT ANSWER

A Inventory turnover by line item

B Revenue for each product and product group by customer.

C Budgeted sales by day, week, fortnight and month for each customer.

D Productivity of sales employees calculated as total revenue divided by number of employees

Answer Explanation

B is correct because it will be most useful to have the actual revenue numbers but not just the total amount. Presenting the revenue based on each product
and product group by customer gives you information about both the total amount that each customer has purchased and also the actual products they
purchased, which gives insight into what products are performing well. This also meets the requirement of being 'financial information'. Revenue is stated in
the statement of profit or loss (P&L).

A is incorrect because this does not give information about customers and it is not financial information.

C is incorrect because the budgeted figure is not as relevant as the actual figure. If it was combined with the actual figure to show a comparison and
variance then this would be more useful. It is also not detailed enough because it is the total amount, not split between different customers.

D is incorrect because this information is not focused on customer sales. The productivity of employees is an average and is therefore not very useful for
decision-making unless there are specific benchmark figures that could be used for comparison—and even if there were, that information would only be
useful as a guide for hiring additional employees.

Module: 2 > Part: A > The information needs of stakeholders > Identifying users with different information needs > Page:
47

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Question 7 Marks: 1
Adriana Silva is the management accountant at MakeGoodsCo, a manufacturing organisation that produces products to customer specifications with strict
completion dates.

Which of the following is the most useful non-financial information that Adriana could provide to MakeGoodsCo’s production manager?

Answer Options
You answered C. The correct answer is C
USER SELECTION CORRECT ANSWER

A Expenses analysed into selling, general and administrative costs.

B Unit cost of each product (product line) produced during the period.

C Customer satisfaction with the quality of the manufactured product.

D Profitability of each product line measured using cost of goods sold (COGS).

Answer Explanation

C is correct because customer satisfaction is unambiguously non-financial and provides feedback to MakeGoodsCo on whether its products are valued by
customers.

A is incorrect because analysis of expenses will not produce financial information of any use to the production manager.

B is incorrect because the unit cost is an average and calculating costs this way depends upon the volume of product.

D is incorrect because the profitability of the products is measured by revenue and COGS and both of these are in the financial statements.

Module: 2 > Part: A > The information needs of stakeholders > Identifying users with different information needs > Page:
47

Question 8 Marks: 1
Catering & Hampers Pty Ltd (C&H) sells gourmet hampers and also provides catering for up-market picnic events. C&H currently has a strategy aimed at
improving customer satisfaction.

Changming Liu, the management accountant at C&H, wants to provide the managers with information that gives a broad view in all three dimensions
(domain, type and source) to help them make decisions to implement a new strategy.

Which of the following should Changming provide?

Answer Options
You answered D. The correct answer is D
USER SELECTION CORRECT ANSWER

A Internal information on customer food preferences based on purchase orders.

B External socioeconomic and demographic information from a recent census.

C Internal information from transactions in a period from source documents such as customer orders.

D External information from customer surveys outlining preferences, loyalty and willingness to purchase products and services.

Answer Explanation

D is correct because detailed information is required to support the strategy and customers can be the most important source of this information.

A is incorrect because using internal information from invoices relies on the fact that adequate information about customer needs and preferences is already
held, and this is unlikely to be the case.

B is incorrect because socioeconomic information from a census is most likely to be out of date and too general to apply to C&H’s customers for its particular
products.

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C is incorrect because transaction information is from the operational transactions and is unlikely to capture any information about the customer (such as
food preferences) except whether they have previously purchased from C&H (i.e. repeat business).
Module: 2 > Part: B > Characteristics and limitations of different kinds of information > Dimensions of information > Page:
63

Question 9 Marks: 0
Dalmeet Singh, the management accountant at ExampleCo, wants to provide information about expenses to Brian Kelly, the sales manager, who wants
information that meets his needs of comparability, verifiability, timeliness and understandability.

Which of the following is most likely to meet these four information needs?

Answer Options
You answered B. The correct answer is A
USER SELECTION CORRECT ANSWER

Information that allows the last period to be compared with the corresponding previous period using the ratio of costs as a percentage of sales
A
three days into the next period.

Information from the previous quarter that has been certified by the internal auditor, together with results supplied by the industry association for
B
the entire market.

C A list of expenses based on the previous month with variances that can be measured against expenses in some earlier quarters.

The figures for expenses discounted by 20 per cent to match the corresponding period last year—because last year there was a power outage so
D
production was stopped for five of the normal 20 days’ manufacturing for the month.

Answer Explanation

A is correct because it fulfils Brian's needs of:

• comparability—last period compared with prior period

• verifiability—checking from cost of goods sold and sales accounts

• timeliness—in three days

• understandability—use of percentages that are understandable.

B is incorrect because certification by the auditor will require time and is therefore unlikely to be timely. Normally the auditor would want to conduct some
checks to validate the information, and this is not completed online in real time.

C is incorrect because it uses an estimate. An estimate is not verifiable. While Dalmeet will have to make estimates from time to time, the actual information
should be used when available, and information about expenses from other periods could also be used.

D is incorrect because the basis for discounting the figure is not stated but must be assumed from the figures given; this may result in overstating or
understating the real figure. The information is not verifiable, and the comparability with a prior period is not reliable for making a decision.

Module: 2 > Part: A > Characteristics of information > Table 2.7 > Page: 65

Question 10 Marks: 1
NichePrams Pty Ltd (NichePrams) is a non-listed company based in Sydney that manufactures high-quality baby prams and accessories. NichePrams is
planning to open a new manufacturing plant in a country town and is considering borrowing the funds for the venture. NichePrams believes the town is
attractive because it has a suitable pool of unskilled workers (due to a high unemployment rate) and opening the factory would boost employment in the
town.

Which of the following actions would fall in the high-power and high-interest quadrant of the stakeholder grid and thus guide NichePrams’s management on
whom to attend to when providing information about the proposed factory?

Answer Options
You answered C. The correct answer is C
USER SELECTION CORRECT ANSWER

A Confirming the unemployed people in the town are seeking work and the new factory will have no detrimental effects on the environment.

B Reassuring current employees that their jobs are secure and there is no intention of closing the factory in Sydney.

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C Ensuring that the lender has full information about the town.

D Conducting a public meeting to give early notice about the proposed factory to ensure community support for the development.

Answer Explanation

C is correct based on Figure 2.2 (page 104) which shows the stakeholder grid. The lender will have high-power because without the lender the project
cannot go ahead. The lender will also have high-interest because if anything goes wrong it will lose a significant amount of money.

A is incorrect because the unemployed will have a high level of interest but a low level of power.

B is incorrect because the current employees are unaffected by this proposal because there is no intention to close the current factory so they will have low-
interest.

D is incorrect because conducting a public meeting is showing consideration to those with high interest but lower power.

Module: 2 > Part: A > Stakeholder management > Stakeholder grid > Figure 2.2 > Page: 50

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