TEST BANK Managerial Accounting 4th Edition By Charles Davis Elizabeth Davis Chapter 1 - 13

1-1 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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TEST BANK
Managerial Accounting 4th Edition
By Charles Davis Elizabeth Davis Chapter 1 - 13

, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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Table Of Contents bh bh




1. Accounting as a Tool for Management
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2.Cost Behavior and Cost Estimation
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3. Cost-Volume-Profit Analysis and Pricing Decisions
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4. Product Costs and Job Order Costing
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5. Planning and Forecasting
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5A: Planning and Forecasting in a Retail Setting* (online only)
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6. Performance Evaluation: Variance Analysis
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7. Activity-Based Costing and Activity-Based Management
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8. Using Accounting Information to Make Managerial Decisions
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9. Capital Budgeting
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10. Decentralization and Performance Evaluation
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11. Performance Evaluation Revisited: A Balanced Approach
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12. Financial Statement Analysis
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13. Statement of Cash Flows
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,1-3 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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Chapter 1 bh




Accounting as a Tool for Management bh bh bh bh bh




CHAPTER LEARNING OBJECTIVES bh bh




1. Define managerial accounting (Unit 1.1) bh bh bh bh




There are several formal definitions of managerial accounting. A simple one is “theg
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eneration of relevant information to support management’s decision- bh bh bh bh bh bh bh




making activities.” bh




2. Describe the differences between managerial and financial accounting( bh bh bh bh bh bh bh h
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Unit 1.1) bh




Managerial accounting’s primary users are managers and decision makers within an orgabh bh bh bh bh bh bh bh bh bh bh




nization, whereas financial accounting is aimed primarily at external users. Unlike GAAP t
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hat guides financial accounting, there are no mandated rules in managerial accounting. M
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anagerial accounting reports focus on operating segments, while financialaccounting stat
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ements report results for the organization as a whole. Managerial accounting is concerne
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d more with projecting future results than reporting past results. Managerial information
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is prepared to take advantage of a window of opportunity, evenif some accuracy must be
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sacrificed. Financial accounting information is balanced to the penny and is delivered afte
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r the end of the accounting period.
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3. List and describe the four functions of managers (Unit 1.1)
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Planning means setting a direction for the organization. Long-
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term, or strategic planningprovides direction for a five- to ten-year period. Short-
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term or operational planning provides more detailed guidance for the coming year; it tran
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slates the company’s strategy into action steps. Controlling is the monitoring of day-to-
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day operations to identify any problems that require corrective action. Evaluating is the p
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rocess of comparing a particular period’s actual results to planned results, for the purpos
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e of assessing managerial performance. Decision making means choosing between altern
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ative courses of action. bh bh bh




4. Explain how the selection of a particular business strategy determines thei
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nformation that managers need to run an organization effectively (Unit 1.2 bh bh bh bh bh bh bh bh bh bh




)
To run a business effectively, managers need information that shows how well operati
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ons are meeting the organization’s strategic goals. For instance, if the organization’s st
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rategy is to be a low- bh bh bh bh bh




cost producer, information about product costsand cost variances will be more useful
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to managers than information about researchand development.
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, 1-4 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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5. Discuss the importance of ethical behavior in managerial accounting (Unit1.
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3)
Ethical behavior means knowing right from wrong and then doing the right thing. Manyc
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ompanies and most professional organizations have codes of conduct to guide employee
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s’ actions. Acting unethically can lead to illegal activity and ultimately to the destruction
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of the firm. Furthermore, research has shown that a public commitment toethical behavi
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or can lead to superior financial performance.
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