1.

A management consultant
a. Is a person who is qualified by education, experience, technical ability, and temperament to advise
or assist businessmen on a professional basis in identifying, defining, and solving specific
management problems involving the organization, planning, direction, control, and operation of a
firm.
b. Is a person who is qualified by education, experience, technical ability, and temperament to advise
or assist businessmen on a professional basis in identifying, defining, and solving specific
management problems involving the organization, planning, direction, control, and operation of a
firm.
c. Is an employee of a client firm who is qualified by education, experience, technical ability, and
temperament to advise or assist businessmen on a professional basis in identifying, defining, and
solving specific management problems involving the organization, planning, direction, control, and
operation of a firm.
d. Should be a CPA, a holder of a masters degree so he may be considered qualified by education,
experience, technical ability, and temperament to advise businessmen on how management
problems could be solved.
2. Management consulting(or management consultancy)
a. Is limited to CPAs.
b. Is not limited to CPAs.
c. May be practiced by anybody since it is not limited to CPAs.
d. Is regulated by law such that an individual must pass a government licensure examination first
before he could practice the same.
3. One of the factors that contributed to the emergence and growth of management consultancy is
a. The development of techniques for the solution of management problems, and the businessmens
awareness of their usefulness.
b. The development of techniques for the solution of management problems, and the businessmens
awareness of how to use them.
c. The trend towards computerization.
d. The complexities in managing and conducting an MAS engagement.
4. Which of the following statements are correct?
a. MAS practice actually stemmed from the CPAs audit practice.
b. Overt symptoms need a more detailed study and a logical extension of the CPAs services.
c. Covert symptoms are easy to perceive, call attention to, and/or remedy.
d. Covert symptoms may simply be covered in the CPAs usual letter to management prepared at the
completion of audit.
5. The primary purpose of management advisory services is
a. To achieve the objectives of the MAS firm.
b. To help the client maximize its resources.
c. To improve the clients use of its capabilities and resources to achieve the objectives of such clients
organization.
d. To help the client identify its problems.
6. Management advisory services may be defined as
a. The function of providing professional advisory services, the primary purpose of which is to improve
the clients use of its capabilities and resources to achieve the objectives of the organization.
b. The function of providing quantitative information, primarily financial in nature, about economic
entities, that is intended to be useful in making economic decision.
c. The art of recording, classifying, and summarizing in a significant manner and in terms of money,
transactions and events which are part at least of a financial character, and interpreting the results
thereof.
d. The process of identifying, measuring, and communicating economic information to permit informed
judgment and decision by users of information.
7. In providing advisory services, the CPA, or the independent accounting firm, applies an analytic
approach and process, which typically involves the following, except
a. Ascertaining certain facts and circumstances.
b. Seeking and identifying objectives.
c. Defining the problem or opportunity for improvement.
d. Evaluating and implementing possible solutions.
8. Which of the following statement(s) is (are) true?
1. MAS relates to the future.
2. MAS cover a wider area than the usual audit and work.
3. Because of the broad scope covered by the MAS, a wider variety of assignments are usually
encountered.
4. MAS engagements require highly qualified staff.
a. All the statements are true.
b. Only three of the statements are true.
c. Only two statements are true.

d. Only one statement is true.

9. The PICPA committee on MS classified the broad areas of MAS into two groups. What are these
groups?
1. Areas which are normally related to the accounting and finance functions.
2. Areas which are not normally related to the accounting and finance functions.
3. Areas which use mathematical techniques like linear programming, queuing theory and simulation
to solve complicated operational problems.
4. Areas which involve financial, technical and marketing evaluation of proposed projects.
a. 1 and 2
b. 3 and 4
c. 2 and 3
d. 1 and 4
10. Management advisory services classified as usual services include
a. Giving advice on dividend policy and plans for expansion.
b. Analysis of financial and operating statements for management, stockholders, banks, and others.
c. Advising on accounting and tax matters relative to estate planning in cooperation with legal and
insurance counsel.
d.
Calculations on government contracts and allocating costs in compliance with reporting
requirement.
11. MAS classified as usual services include the following, except
a. Evaluation of form of business organization.
b. Design of filing system for storing the accounting records.
c. Establishment of control for cash, receivables, inventory, plant, property and equipment, and other
items to assist management and expedite the audit process.
d. Preparing market analysis for products and services.
12. Which of the following statement(s) is (are) correct?
1. The scope of services offered by consultants should be adequate to identify and resolve the clients
basic problems and not just problem symptoms.
2. Should a consultant feel that he cannot effectively handle the proposed engagements because of
limitations in skills, competence, and economic requirements, consultant may refer this to another
practitioner whom he thinks can effectively do the job.
3. It is the responsibility of a practitioner to be sure that the nature and scope of the management advisory
services he elects to offer are in conformity with the Code of Professional Ethics.
4. Each consultant has the responsibility to evaluate his ability to render MAS of a professional quality in
each specific area, and refrain from representing himself as qualified and willing to accept work in areas
where he does not possess the required competence.
a. Statements 1,2,3 & 4
b. Statements 1,2, & 4
c. Statements 2,3, & 4
d. Statements 1 & 4
13. Following the steps involved in the analytical approach and process presented at random:
1. Evaluating and determining possible solutions
2. Seeking and identifying objectives
3. Presenting findings and recommendations
4. Ascertaining certain facts and circumstances
5. Defining the problem or opportunity for improvement
6. Planning and scheduling actions to achieve the desired results
7. Advising and technical assistance in implementing
Arrange the above steps in proper order:
a. 1,2,3,4,5,7,6
b. 4,2,5,1,3,6,7
c. 5,1,4,6,2,7,3
d. 7,5,3,1,6,2,4
14. In special study arrangements,
a. The consultants contribution is to give advice on the overall program and the organization and
composition of the participating the groups, to provide technical assistance to the working level, to
monitor progress and to report on this and other important matters to the senior management
group.
b. The client does not seek the consultants assistance in achieving the desired result, but only his
professional judgment.
c. Client representations from both the working and decision making levels are required.
d. Any action beyond the point of decision is solely the responsibility of the consultant.
15. In informal service,
a. The nature of the services rendered is informal and therefore, no presumption should exist that an
extensive study has been performed to identify and consider pertinent facts and alternatives.
b. Any action beyond the point of decision is solely the responsibility of the consultant.

c. Once the implementation is concluded, the clients participation is concluded, and only the
consultants personnel remain to carry the solution.
d. The consultant need not be independent in mental attitude.
16. Which of the following statements is correct?
a. In performing MAS, a practitioner must act with integrity and objectivity and be independent in
mental attitude.
b. Engagements are to be performed by practitioners having incompetence in the analytical approach
and process and in the technical subject matter under consideration.
c. Due personal care is to be exercised in the performance of a management advisory services
engagement.
d. None of the above.
17. To avoid possible misunderstanding in the future, the practitioner should put in writing every term
agreed upon with the client during negotiation. This may be done through any of the following, except
a. Proposal letter
b. Confirmation letter
c. Contract
d. None of the above
18. It may be considered as the master plan for the engagement which serves as a framework for its
progress. It can be used as a planning tool that documents how the engagement will be carried out,
organizes the engagement into scheduled and logical sequences, and indicates the various tasks
necessary to achieve the objectives of the engagement.
a. Engagement work program
b. Master budget
c. Engagement blueprint
d. Engagement plan
19. Final written reports in MS engagements may be classified as either long form or short form report.
The short form report
a. Contains all the circumstances about the engagement, including the practitioners findings and
recommendations.
b. Is issued to the client when he decides to do the implementation phase without requesting
assistance from the consultant.
c. Is usually issued when, during the execution stage of the engagement, interim reporting was
extensively used, and there was a close and continuous coordination between the consultant/team
members and the client.
d. Summarizes the findings to date, work accomplished in relation to plan, and, when appropriate,
and tentative recommendations.
20. Which of the following statements is true?
a. A management letter is a report submitted by the CPA to management after the review of the
management controls stating the coverage of the review and the deficiencies noted during the
review.
b. Management advisory services include the consultative services to management in its decisionmaking.
c. Expertise in management advisory services is acquired by education, auditing and other
experience, and actual performance of management advisory services.
d. Management advisory services include decision-making services performed by the practitioner for
management.
21. Which of the following statements is incorrect?
1. A CPA firms primary purpose for performing MAS is to enable the staff members to acquire the
necessary continuing education in all areas of business.
2. MAS consultation, unlike MAS engagement, generally involves giving of advice or information by a
CPA in which an analytical process is applied.
3. Management consultancy is an exclusive field of practice for CPAs and is regulated by the law.
4. An area of MAS which is directly related to the accounting and finance functions is project feasibility
study.
a. Only one statement is incorrect.
b. Only two statements are incorrect.
c. Only 3 statements are incorrect.
d. All the statements are incorrect.
22. Which of the following is not a characteristic of MAS?
a. In MAS engagements, the nature of work involved requires a lesser need for junior assistance.
b. A wider variety of assignments are encountered in MAS than in audit engagements.
c. MAS engagements are recurring.
d. In MAS, actions to be taken are identified, the benefits of which will be received in the future.
23. Which of the following will not impair the independence of a CPA in the rendition of MAS?
a. The CPA performs decision making functions for his client.
b. The CPA does not extend his services beyond the presentation of recommendations or giving of
advice.

c. The CPA loses his objectivity and acts in a manner as if he is advocating for the interest of his
client.
d. The CPA performs services wherein he is in effect acting as an employee of the client.
24. Which of the following statements is correct?
a. MAS is confined only to such areas as financial accounting, auditing, and tax services.
b. Because the MAS practitioner must be independent, he must not allow the client to participate in
any phase of his engagement.
c. Although MAS extends beyond the traditional accounting services , MS practitioners are still bound
by the rules of professional ethics in the practice of accounting in general.
d. In management audit , a team with a mix of members who are accountants and non-accountants
will provide a desirable combination of specialists and will offer a cross-fertilization of ideas from
different business fields.
25. The following statements refer to competence of CPAs in management services, except:
a. It is the ability to identify client needs, use analytical approach and process, actual experience in
MS work, and research.
b. In concept, it refers to the technical qualifications of the practitioner and his ability to supervise and
evaluate the quality of work of his staff assigned to the engagement so as to be responsible for the
successful completion of the project.
c. It must be retained in the rendition of MS work and it can be impaired if the CPA performs decisionmaking for the client or acts as employee of the client.
d. It is acquired by education, self-study, attendance to the professional development courses, actual
experience in MS work, and research.
26. The following statements relate to MAS practice standards.
1. A practitioner is to notify the client of any reservations he has regarding anticipated benefits.
2. Throughout the engagement, there ought to be systematic critical review of accomplishments and
work should be done within the framework of the Code of Ethics and other professional standards.
3. During the engagement, should there be significant changes between cost and anticipated benefits,
the client should be informed.
4. Before the engagement, the practitioner must make arrangements with, and inform the client on
significant matters related to the engagement.
Which of the statements pertain(s) to the MAS practice standard on Client Benefit?
a. All the statements
b. Statements 1 & 3 only
c. Statements 1, 3 & 4 only
d. Statement 1 only
27. Which of the following statements is false?
a. CPAs performing management services may be considered to be in the practice of management
consulting.
b. Included in the practice of consulting is the provision of confidential service in which the identity of
the client is concealed.
c. Business firms hire management consultants to help define specific problems and develop
solutions.
d. CPAs provide management services to go around the ethical constraints as mandated by the
Accountancy Act.
28. A CPA should reject a MAS engagement if
a. He audits the financial statements of a subsidiary of the prospective client.
b. The proposed engagement is not accounting related.
c. His recommendations are to be subjected to a review by the client.
d. It would require him to make management decisions for the prospective client.
29. In marketing and promotion of themselves and their work, professional accountants, including those
engaged in management consulting, should
a. Use means which brings the profession into disrepute.
b. Not make exaggerated claims for the services they are able to offer, the qualifications they possess,
or experience they have gained.
c. Denigrate the work of other accountant.
d. Not make any claims for the services they offer.
30. After making the preliminary audit arrangements, an engagement confirmation letter should be sent to
the client. The letter usually would not include
a. A statement that management letter will be issued outlining comments and suggestions as to any
procedures requiring the clients attention.
b. An estimate of the time to be spent on the audit work by audit staff and management.
c. A statement that management advisory services would be made available upon request.
d. A reference to the auditors responsibility for the detection of errors or irregularities.
31. A CPA engaged in MS practice may not
a. disclose confidential information unless authorized or legally obligated.
b. Act as independent auditor of the same client-firm.
c. Accept other employment while serving as management consultant.

d. Be independent in mental attitude.

32. A CPA in public practice was engaged by a client who has little accounting and experience to perform
MAS. After presenting several alternatives solutions and the probable outcome each, the CPA decided
to implement the best alternative solution and assumed full responsibility for which the client agreed.
a. The CPA did just the right thing.
b. The CPA should have asked the client first if he (the client) is capable to implement the solution
before doing it himself.
c. The CPA should not have implemented the best alternative solution and should not have assumed
full responsibility even if the client agreed, for these should have been done by the client.
d. The CPA was correct in implementing the solution, but full responsibility should have been assumed
by the client.
33. M and S are partners in an MAS firm. One of the firms clients is X Corporation, wherein M is a board
member. X Corporation is not an audit client. X Corporation is negotiating an MS engagement with the
MAS firm.
a. It is unethical for the MAS firm to accept the engagement because it is a violation of the standards
of independence.
b. It is unethical for the MAS firm to accept the engagement because S has financial interests in X
Corporation, hence, he loses his independence as practitioner.
c. It is not unethical for the MAS firm to accept the engagement since X Corporation may not be
considered as a sister company of the MAS firm.
d. It is not unethical for the MAS firm to accept the engagement, as long as there is a full disclosure of
the relationship to all parties at the outset of the engagement and in any written final report.

PART II.
1. Managerial accounting is
a. A field of accounting that provides economic and financial information for internal users, particularly
the managers or decision-makers in an organization.
b. A field of accounting that provides economic and financial information for external users,
particularly the stockholders, creditors, and customers.
c. A specialized field which involves the determination and interpretation of the cost per unit of
business activities and manufactured products.
d. The clerical side of accounting which involves the recording of routine, day-to-day transactions.
2. Which of the following statements is/are correct?
1. Managers carry out their planning function by mobilizing the organizations resources and
overseeing day-to-day operations.
2. Managers carry out their control function by obtaining feedback to ensure that the plans are being
followed.
3. The planning, directing and motivating, and controlling functions of a manager are kept separate
from such managers decision-making activities.
4. The managers planning function involves setting of the organizations goals and identifying
alternatives and selecting the alternative that best furthers such goals set for the organization.
a. Statements 1, 2, 3, and 4
b. Statements 2 and 3
c. Statements 2 and 4
d. Statements 2, 3, and 4
3. The American Institute of Management Accountants came up with the Standards of Ethical Conduct for
Management Accountants which have four sections, namely
a. Competence, confidentiality, integrity, and objectivity.
b. Competence, security, integrity, and objectivity.
c. Competence, confidentiality, integrity, and maturity.
d. Competition, confidentiality, integrity, and objectivity.
4. Financial and managerial accounting differ in a number of ways. In contrast to financial accounting,
managerial accounting
a. Focuses on providing data for external users.
b. Emphasizes relevance and flexibility rather than precision.
c. Is mandatory.
d. Is governed by Generally Accepted Accounting Principles.
5. Which of the following statements relating to Standards of Ethical Conduct for Management
Accountants is correct?
a. A management accountant should refuse all gifts and hospitality offered by one of the companys
suppliers.

6.

7.

8.

9.

b. A management accountant should inform his superiors regarding the confidentiality of information
acquired in the course of their work and monitor their activities to assure the maintenance of that
confidentiality.
c. A management accountant should prepare complete and clear reports and recommendations
before appropriate analysis of relevant and reliable information.
d. Management accountants have a responsibility to disclose fully all relevant information that could
reasonably be expected to influence an intended users understanding of the reports, comments,
and recommendations presented.
Management accounting includes the following processes, except
a. Measurement
b. Identification
c. Accumulation
d. Delegation
Managerial accounting differs from financial accounting in that financial accounting is
a. Involved more heavily in decision analysis.
b. Future oriented.
c. concerned primarily with external financial reporting.
d. concerned with qualitative information.
Integrity is an ethical requirement for all management accountants. One aspect of integrity requires
a. maintenance of an appropriate level of professional competence.
b. Performance of professional duties in accordance with applicable laws.
c. Refraining from improper use of confidential information.
d. Avoidance of actual or apparent conflicts of interest and advise all appropriate parties of any
potential conflict.
Statement 1 Managerial control and engineering control are synonyms.
Statement 2 Control from the viewpoint of management accounting is defined as the
process of setting maximum limits on financial expenditures.

Statement 1
Statement 2
a.
true
true
b.
false
false
c.
true
false
d.
false
true
10. In financial accounting, certain rules and regulations must be followed on how financial statements
must be presented to readers. In managerial accounting, no such restrictions generally apply because it
is
a. An entirely different field that need not observed the broad guidelines in financial accounting.
b. Designed to provide management with non-financial information for decision-making.
c. Designed to provide accounting and other financial data to assist management in making business
decisions.
d. A discipline that does not require preparation of financial statements.
11. Just-in-Time (JIT) is a system that seeks improvement by reducing inventories to the absolute
minimum levels possible. It means that
a. Raw materials are purchased just in time to go into production.
b. Sub-assemblies or component parts are completed just in time the materials needed are
purchased.
c. Products are completed just in time an order is received from customers.
d. None of the above.
12. In JIT, the flow of goods is controlled by a pull approach. It means that
a. Work is initiated only in response to customer orders.
b. Customers are pulled to buy more units to reduce the companys inventory.
c. Production supervisors see to it that there is always something to do to keep everyone busy.
d. Warehouses should always be full to be sure that customer demands are always met.
13. Which of the following statements about JIT is true?
a. Under JIT, partially completed units are pushed from one workstation to another to ensure all
workstations have enough work to keep busy.
b. A company will typically have fewer suppliers under JIT than under a conventional system.
c. For JIT to operate successfully, all similar pieces of equipment must grouped together.
d. JIT requires an increase in funds to finance additional inventories.
14. Which of the following is among the benefits of adopting a just-in-time system?
a. Reduction in the number of deliveries of materials.
b. Increase in the number of suppliers.
c. Performance of non-value added activities.
d. Maximization of standard delivery quality.
15. The primary objective of just-in-time processing is to
a. Identify relevant activity cost drivers.
b. Accumulate overhead in activity cost pools.

c. Identify non-value added activities.

d. Eliminate or reduced inventories.
16. It is an approach to continuous improvement that focuses in serving customers and uses front-line
workers to identify and solve problems systematically.
a. Total quantity management
b. Just-in-time system
c. Total quality management
d. ABC system
17. Total quality management (TQM) is an integrated system that identifies customers (internal and
external) and establishes their requirements. Accordingly, the external, or ultimate customers, is best
served when internal customers are also well served. In view of this, the primary purpose for adopting
TQM is to
a. Achieve greater employee satisfaction.
b. Achieve greater customer satisfaction.
c. Reduce delivery time.
d. Reduce delivery charges.
18. The four categories of quality costs are
a. Product liability, warranty, appraisal, and training costs.
b. Internal failure, external failure, carrying, and ordering costs.
c. Prevention, appraisal, internal failure, and external failure costs.
d. Training, testing, failure, and conformance costs.
19. Time management is related to TQM. For example, product development time is a crucial factor if a
company wants to be competitive. If product development time is reduced, the products life cycle
becomes shorter, which of course is advantageous for the firm. One financial measure of product
development is the break-even time which is
a. Determined by calculating the time required for the present value of the cumulative cash flows to
equal revenues earned from the product.
b. The time from management approval of the project to the time when the cumulative present value
of its net cash inflows equals the cumulative present value of the investment cash inflows.
c. The point where total sales equals total costs.
d. The point where fixed costs are constant.
20. In quality control program, which of the following is/are categorized as external failure costs?
1. Rework
2. Statistical quality control procedures
3. Responding to customer complaints
a. 1 only
b. 2 only
c. 3 only
d. 1,2, and 3
21. Non-financial performance measures, such as product, are useful in engineering and operations
managers for day-to-day control purposes. Which of the following indicators may be used to assess
product quality?
1. Number and types of customer complaints
2. Production cycle time
3. Returns and allowances
a. 1 and 2 only
b. 1 and 3 only
c. 2 and 3 only
d. 1,2 and 3
22. Total quality management (TQM) emphasizes quality as a basic organizational function. Under this
approach,
a. A large number of suppliers are used to obtain the lowest possible prices.
b. Highly trained inspectors perform quality control at the end of the production process.
c. Quality measurement occurs throughout the process and errors or defects are caught and corrected
at source.
d. The primary responsibility for the quality of the products/services is assumed by upper
management.
23. Which of the following statements about TQM is correct?
a. TQM is characterized by a hierarchical organizational structure.
b. In TQM, the organizational structure involves teams of people from different specialties.
c. In TQM, the organizational structure involves teams of people from the same specialty.
d. In TQM, it is advisable that specialists in the organization work individually rather than as a team.
24. Following are some items included in the cost-quality report prepared for Kalidad Company for the
previous month:
Employee training costs

P10,00

0
4,000
16,000
5,000

Product testing
Equipment maintenance
Rework
Based on the above data,
a. Prevention cost is P26, 000.
b. Appraisal cost is P5, 000.
c. External failure cost is P4, 000.
d. Internal failure cost is P21,000.
25. Some companies under TQM use quality cost indices to measure and analyze the cost of maintaining a
given level of quality. For example, a quality cost index with direct labor as the base may be computed
as follows:
Quality cost index

= Total quality cost

Direct labor cost

x 100

Assume that the company has the following data for the first quarter of the year:
Conformance costs:
Non-conformance costs:

Prevention
Appraisal
Internal failure
External failure
Materials
Direct labor
Factory overhead

P 20,000
30,000
60,000
10,000
500,000
300,000
200,000

Based on the given data, the

quality cost index for the first
quarter of the year was

a. Manufacturing costs:
24%
b.
60%
c.
23.33%
d.
40%
26. Business process re-engineering (BPR) is a method of examining business processes that identify, and
then eliminate, reduce, or replace non-valued activities. The major business trends that promote the
increased use of BPR are the following, except
a. Pursuit of increased quality.
b. Advancement of technology.
c. Increase in price competition caused by globalization.
d. The management accountants desire to introduce change.
27. The Theory of Constraints (TOC) is based on the idea that every organization has at least one
constraint that prevents it from obtaining more of its objective. Under TOC,
a. Efforts that are designed to improve the rate of output of a workstation should generally be focused
on the constraint.
b. A company that wants to improve its operations should focus its improvement efforts on the
workstation with the highest productive capacity.
c. Improvement efforts should be focus on non-constraints.
d. No company has constraints.
28. Which of the following statements about Theory of Constraints (TOC) is correct?
a. TOC is based on the idea that every organization has at least one constraint that prevents it from
getting more of its objectives.
b. TOC maintains that effectively managing the constraint is a key to success.
c. Under the TOC, improvement efforts should be focused on the constraints.
d. All of the above.