,Managerial Accounting, 4e (Whitecotton)
Chapter 1 Introduction to Managerial Accounting
1) Financial accounting information is generally used exclusively by internal parties such as
managers.
Answer: FALSE
Explanation: Financial accounting information is used by external parties; managerial
accounting information is used by internal business owners and managers.
Difficulty: 1 Easy
Topic: Comparison of financial and managerial accounting
Learning Objective: 01-01 Describe the key differences between financial accounting and
managerial accounting.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2) Financial accounting information is reported for the company as a whole.
Answer: TRUE
Explanation: Financial accounting information is provided at the company-wide level.
Difficulty: 1 Easy
Topic: Comparison of financial and managerial accounting
Learning Objective: 01-01 Describe the key differences between financial accounting and
managerial accounting.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3) Managers must direct, lead and motivate during the implementation function.
Answer: TRUE
Explanation: Directing/leading involves putting the plan into action, and motivating others to
work toward the plan's success, and it is a key part of putting a plan into action (implementation).
Difficulty: 1 Easy
Topic: Functions of Management
Learning Objective: 01-02 Describe how managerial accounting is used in different types of
organizations to support the key functions of management.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) Managers of small, private corporations use managerial accounting information whereas
managers of large, public corporations use financial accounting information.
Answer: FALSE
Explanation: Managerial accounting information is used by managers in all types of
organizations: large and small, public and private, profit and nonprofit.
Difficulty: 1 Easy
Topic: Functions of Management
Learning Objective: 01-02 Describe how managerial accounting is used in different types of
organizations to support the key functions of management.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) The Sarbanes-Oxley Act of 2002 places full responsibility on the board of directors for the
accuracy of the reporting system.
Answer: FALSE
Explanation: SOX places more responsibility on all managers (not just accountants) for the
accuracy of the reporting system. SOX also places additional responsibilities on the boards of
directors and external auditors to reduce the opportunity for errors and fraud.
Difficulty: 2 Medium
Topic: Ethics and the Sarbanes-Oxley Act
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
6) The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting reporting
environment: ethics, fraud, and managers.
Answer: FALSE
Explanation: The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting
reporting environment: opportunity, incentives, and character.
Difficulty: 2 Medium
Topic: Ethics and the Sarbanes-Oxley Act
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Understand
AACSB: Ethics
Accessibility: Keyboard Navigation
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 7) A sustainable business is one with the ability to meet the needs of today without sacrificing
the ability of future generations to meet their own needs.
Answer: TRUE
Explanation: In the context of business "sustainability" means the ability to meet the needs of
today without sacrificing the ability of future generations to meet their own needs.
Difficulty: 1 Easy
Topic: Sustainability Accounting
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Remember
AACSB: Ethics
Accessibility: Keyboard Navigation
8) The term "Big data" refers to the volume, velocity and veracity of data.
Answer: FALSE
Explanation: Veracity is a synonym for accuracy, which is not one of the characteristics of big
data. The 3 characteristics of "Big data" are volume, velocity, and variety
Difficulty: 1 Easy
Topic: Decision Analytics
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
9) Predictive analytics is the process of recommending a course of action based upon meaningful
patterns and insights from collected data.
Answer: FALSE
Explanation: Prescriptive analytics, not predictive analytics, recommends courses of action
Difficulty: 1 Easy
Topic: Decision Analytics
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1 Introduction to Managerial Accounting
1) Financial accounting information is generally used exclusively by internal parties such as
managers.
Answer: FALSE
Explanation: Financial accounting information is used by external parties; managerial
accounting information is used by internal business owners and managers.
Difficulty: 1 Easy
Topic: Comparison of financial and managerial accounting
Learning Objective: 01-01 Describe the key differences between financial accounting and
managerial accounting.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2) Financial accounting information is reported for the company as a whole.
Answer: TRUE
Explanation: Financial accounting information is provided at the company-wide level.
Difficulty: 1 Easy
Topic: Comparison of financial and managerial accounting
Learning Objective: 01-01 Describe the key differences between financial accounting and
managerial accounting.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3) Managers must direct, lead and motivate during the implementation function.
Answer: TRUE
Explanation: Directing/leading involves putting the plan into action, and motivating others to
work toward the plan's success, and it is a key part of putting a plan into action (implementation).
Difficulty: 1 Easy
Topic: Functions of Management
Learning Objective: 01-02 Describe how managerial accounting is used in different types of
organizations to support the key functions of management.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) Managers of small, private corporations use managerial accounting information whereas
managers of large, public corporations use financial accounting information.
Answer: FALSE
Explanation: Managerial accounting information is used by managers in all types of
organizations: large and small, public and private, profit and nonprofit.
Difficulty: 1 Easy
Topic: Functions of Management
Learning Objective: 01-02 Describe how managerial accounting is used in different types of
organizations to support the key functions of management.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) The Sarbanes-Oxley Act of 2002 places full responsibility on the board of directors for the
accuracy of the reporting system.
Answer: FALSE
Explanation: SOX places more responsibility on all managers (not just accountants) for the
accuracy of the reporting system. SOX also places additional responsibilities on the boards of
directors and external auditors to reduce the opportunity for errors and fraud.
Difficulty: 2 Medium
Topic: Ethics and the Sarbanes-Oxley Act
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
6) The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting reporting
environment: ethics, fraud, and managers.
Answer: FALSE
Explanation: The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting
reporting environment: opportunity, incentives, and character.
Difficulty: 2 Medium
Topic: Ethics and the Sarbanes-Oxley Act
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Understand
AACSB: Ethics
Accessibility: Keyboard Navigation
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 7) A sustainable business is one with the ability to meet the needs of today without sacrificing
the ability of future generations to meet their own needs.
Answer: TRUE
Explanation: In the context of business "sustainability" means the ability to meet the needs of
today without sacrificing the ability of future generations to meet their own needs.
Difficulty: 1 Easy
Topic: Sustainability Accounting
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Remember
AACSB: Ethics
Accessibility: Keyboard Navigation
8) The term "Big data" refers to the volume, velocity and veracity of data.
Answer: FALSE
Explanation: Veracity is a synonym for accuracy, which is not one of the characteristics of big
data. The 3 characteristics of "Big data" are volume, velocity, and variety
Difficulty: 1 Easy
Topic: Decision Analytics
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
9) Predictive analytics is the process of recommending a course of action based upon meaningful
patterns and insights from collected data.
Answer: FALSE
Explanation: Prescriptive analytics, not predictive analytics, recommends courses of action
Difficulty: 1 Easy
Topic: Decision Analytics
Learning Objective: 01-03 Describe the importance of ethics, sustainability, and decision
analytics in managerial accounting.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
