Chapter 1 The Accountant's Vital Role in Decision Making
1.1 Explain how management accounting data are essential to the process of
rational operating and strategic decision making.
1) Management accounting is guided by generally accepted accounting principles.
Answer: FALSE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
2) Managerial accounting and cost accounting both measure and report financial and non-
financial information relating to the cost of acquiring or utilizing resources.
Answer: TRUE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
3) Cost accounting provides information for both management and financial accounting.
Answer: TRUE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
4) Management accountants are required to follow the generally accepted accounting principles
that are used for external financial reporting when preparing reports for internal users.
,Answer: FALSE
Diff: 2 Type: TF
Skill: Knowledge
Objective: LO 1-1
5) Managers typically receive reports on cost planning and controls that should be considered for
internal use only.
Answer: TRUE
Diff: 2 Type: TF
Skill: Knowledge
Objective: LO 1-1
6) There are three (3) basic business strategies: low cost, premium products, and customer
satisfaction.
Answer: FALSE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
,7) Companies with a strategy of low prices compete on their ability to offer unique new products
or services that are priced higher than their competition.
Answer: FALSE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
8) Cost management involves long-term and short-term decisions that attempt to increase value
for customers and lower costs of products or services.
Answer: TRUE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
9) The key to a company's success is always to be the low cost producer in a particular industry.
Answer: FALSE
Explanation: The low cost producer in a particular industry will not necessarily be successful.
Diff: 2 Type: TF
Skill: Comprehension
Objective: LO 1-1
10) Companies generally follow one of two basic strategies: 1) providing a quality product or
service at low prices, or 2) offering a unique product or service often priced higher than
competing products.
Answer: TRUE
Diff: 2 Type: TF
Skill: Knowledge
Objective: LO 1-1
, 11) In what way do managers benefit from the use of a database, or "data warehouse"?
A) Data can be entered at numerous input terminals within the organization.
B) The managers would not be completely responsible for the information that is entered into the
database system.
C) The managers could combine or adjust these data to answer the questions from particular
internal and external users.
D) The managers do not benefit, as the information requires technical expertise to retrieve.
E) Managers can store old documents in hard copy.
Answer: C
Diff: 2 Type: MC
Skill: Comprehension
Objective: LO 1-1
1.1 Explain how management accounting data are essential to the process of
rational operating and strategic decision making.
1) Management accounting is guided by generally accepted accounting principles.
Answer: FALSE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
2) Managerial accounting and cost accounting both measure and report financial and non-
financial information relating to the cost of acquiring or utilizing resources.
Answer: TRUE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
3) Cost accounting provides information for both management and financial accounting.
Answer: TRUE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
4) Management accountants are required to follow the generally accepted accounting principles
that are used for external financial reporting when preparing reports for internal users.
,Answer: FALSE
Diff: 2 Type: TF
Skill: Knowledge
Objective: LO 1-1
5) Managers typically receive reports on cost planning and controls that should be considered for
internal use only.
Answer: TRUE
Diff: 2 Type: TF
Skill: Knowledge
Objective: LO 1-1
6) There are three (3) basic business strategies: low cost, premium products, and customer
satisfaction.
Answer: FALSE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
,7) Companies with a strategy of low prices compete on their ability to offer unique new products
or services that are priced higher than their competition.
Answer: FALSE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
8) Cost management involves long-term and short-term decisions that attempt to increase value
for customers and lower costs of products or services.
Answer: TRUE
Diff: 1 Type: TF
Skill: Knowledge
Objective: LO 1-1
9) The key to a company's success is always to be the low cost producer in a particular industry.
Answer: FALSE
Explanation: The low cost producer in a particular industry will not necessarily be successful.
Diff: 2 Type: TF
Skill: Comprehension
Objective: LO 1-1
10) Companies generally follow one of two basic strategies: 1) providing a quality product or
service at low prices, or 2) offering a unique product or service often priced higher than
competing products.
Answer: TRUE
Diff: 2 Type: TF
Skill: Knowledge
Objective: LO 1-1
, 11) In what way do managers benefit from the use of a database, or "data warehouse"?
A) Data can be entered at numerous input terminals within the organization.
B) The managers would not be completely responsible for the information that is entered into the
database system.
C) The managers could combine or adjust these data to answer the questions from particular
internal and external users.
D) The managers do not benefit, as the information requires technical expertise to retrieve.
E) Managers can store old documents in hard copy.
Answer: C
Diff: 2 Type: MC
Skill: Comprehension
Objective: LO 1-1
