Chapter 1
What Is Managerial Accounting?
True/False
1.Managerial accounting focuses on providing historical financial information to outside users
including shareholders and creditors.
False; Section 1
Level: easy
2. Managerial accounting information must follow U.S. Generally Accepted Accounting
Principles (GAAP).
False; Section 1
Level: easy
3. Managerial accounting can only use financial performance measures.
False; Section 1
Level: easy
4. Financial accounting focuses on external users, while managerial accounting focuses on
internal users.
True; Section 1
Level: easy
5.The control function is implemented to assess an organization's plan and may lead to
recommendations for the future.
True; Section 2
Level: easy
, 6.There is one standard form of budget used by all companies.
False; Section 2
Level: easy
7.The treasurer is typically in charge of all finance and accounting functions within an
organization.
False; Section 3
Level: easy
8. An internal auditor typically reports to the CFO and is responsible for confirming that the
company has controls to ensure accurate financial data.
True; Section 3
Level: easy
9. Regardless of size, all companies have a chief financial officer (CFO) and a treasurer.
False; Section 3
Level: easy
10. The Institute of Management Accountants (IMA) provides formal guidance to help in
choosing ethically acceptable courses of action.
True; Section 4
Level: easy
11. The Securities and Exchange Commission (SEC) does not require a company to disclose
whether it has adopted a code of ethics.
False; Section 4
Level: easy
,12. Enterprise Resource Planning (ERP) systems are only used by large publicly held
organizations.
False; Section 5
Level: easy
13. Before purchasing an Enterprise Resource Planning (ERP) system, companies must confirm
that the benefits of an ERP system will outweigh the costs of implementation.
True; Section 5
Level: easy
14. Enterprise Resource Planning (ERP) systems should be implemented by all organizations
since ERP systems are inexpensive and lead to better decisions.
False; Section 5
Level: easy
15. Product costs are always expensed in the period when they are incurred.
False; Section 6
Level: easy
16. An example of selling costs would be salaries for marketing personnel.
True; Section 6
Level: easy
17. It is important to include small inexpensive items (such as glue or nails) related to
production as direct materials, in order to calculate accurate product cost data.
False; Section 6
Level: easy
, 18. For a custom home builder, lumber should be categorized as direct materials.
True; Section 6
Level: easy
19. The three categories of manufacturing costs include direct materials, manufacturing
overhead, and selling costs.
False; Section 6
Level: easy
20. The term "product costs" refers exclusively to the direct labor used in the production
process.
False; Section 6
Level: easy
21. Distinguishing between period and product costs can be done quickly and easily.
False; Section 6
Level: easy
22. Manufacturing overhead consists of all costs related to the production process other than
direct materials and direct labor.
True; Section 6
Level: easy
23. Period costs are also called manufacturing costs.
False; Section 6
Level: easy
What Is Managerial Accounting?
True/False
1.Managerial accounting focuses on providing historical financial information to outside users
including shareholders and creditors.
False; Section 1
Level: easy
2. Managerial accounting information must follow U.S. Generally Accepted Accounting
Principles (GAAP).
False; Section 1
Level: easy
3. Managerial accounting can only use financial performance measures.
False; Section 1
Level: easy
4. Financial accounting focuses on external users, while managerial accounting focuses on
internal users.
True; Section 1
Level: easy
5.The control function is implemented to assess an organization's plan and may lead to
recommendations for the future.
True; Section 2
Level: easy
, 6.There is one standard form of budget used by all companies.
False; Section 2
Level: easy
7.The treasurer is typically in charge of all finance and accounting functions within an
organization.
False; Section 3
Level: easy
8. An internal auditor typically reports to the CFO and is responsible for confirming that the
company has controls to ensure accurate financial data.
True; Section 3
Level: easy
9. Regardless of size, all companies have a chief financial officer (CFO) and a treasurer.
False; Section 3
Level: easy
10. The Institute of Management Accountants (IMA) provides formal guidance to help in
choosing ethically acceptable courses of action.
True; Section 4
Level: easy
11. The Securities and Exchange Commission (SEC) does not require a company to disclose
whether it has adopted a code of ethics.
False; Section 4
Level: easy
,12. Enterprise Resource Planning (ERP) systems are only used by large publicly held
organizations.
False; Section 5
Level: easy
13. Before purchasing an Enterprise Resource Planning (ERP) system, companies must confirm
that the benefits of an ERP system will outweigh the costs of implementation.
True; Section 5
Level: easy
14. Enterprise Resource Planning (ERP) systems should be implemented by all organizations
since ERP systems are inexpensive and lead to better decisions.
False; Section 5
Level: easy
15. Product costs are always expensed in the period when they are incurred.
False; Section 6
Level: easy
16. An example of selling costs would be salaries for marketing personnel.
True; Section 6
Level: easy
17. It is important to include small inexpensive items (such as glue or nails) related to
production as direct materials, in order to calculate accurate product cost data.
False; Section 6
Level: easy
, 18. For a custom home builder, lumber should be categorized as direct materials.
True; Section 6
Level: easy
19. The three categories of manufacturing costs include direct materials, manufacturing
overhead, and selling costs.
False; Section 6
Level: easy
20. The term "product costs" refers exclusively to the direct labor used in the production
process.
False; Section 6
Level: easy
21. Distinguishing between period and product costs can be done quickly and easily.
False; Section 6
Level: easy
22. Manufacturing overhead consists of all costs related to the production process other than
direct materials and direct labor.
True; Section 6
Level: easy
23. Period costs are also called manufacturing costs.
False; Section 6
Level: easy
