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 ff




ManagerialAccounting4thEditionf f f




ByCharles Davis Elizabeth Davis
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, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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Table Of Contents
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1. Accounting as a Tool for Management ff ff ff ff ff




2. Cost Behavior and Cost Estimation
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3. Cost-Volume-Profit Analysis and Pricing Decisions ff ff ff ff




4. Product Costs and Job Order Costing
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5. Planning and Forecasting ff ff




5A: Planning and Forecasting in a Retail Setting* (online only)
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6. Performance Evaluation: Variance Analysis ff ff ff




7. Activity-Based Costing and Activity-Based Management ff ff ff ff




8. Using Accounting Information to Make Managerial Decisions
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9. Capital Budgeting ff




10. Decentralization and Performance Evaluation ff ff ff




11. Performance Evaluation Revisited: A Balanced Approach ff ff ff ff ff




12. Financial Statement Analysis ff ff




13. Statement of Cash Flows ff ff ff

,1-3 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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Chapter 1 ff




Accounting as a Tool for Management ff ff ff ff ff




CHAPTER LEARNINGOBJECTIVES ff f




1. Definemanagerialaccounting (Unit 1.1) f f ff f



There are several formal definitions of managerial accounting. A simple one
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is “thegeneration of relevant information to support management’s decision-
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making activities.”
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2. Describethedifferencesbetweenmanagerialandfinancial f f f f f f




accounting(Unit 1.1)
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Managerial accounting’s primary users are managers and decision makers within ff ff ff ff ff ff ff ff ff



an organization, whereas financial accounting is aimed primarily at external
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users. Unlike GAAP that guides financial accounting, there are no mandated
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rules in managerial accounting. Managerial accounting reports focus on
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operating segments, while financialaccounting statements report results for the
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organization as a whole. Managerial accounting is concerned more with
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projecting future results than reporting past results. Managerial information is
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prepared to take advantage of a window of opportunity, evenif some accuracy
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must be sacrificed. Financial accounting information is balanced to the penny
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and is delivered after 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-term, or strategic
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planningprovides direction for a five- to ten-year period. Short-term or
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operational planning provides more detailed guidance for the coming year; it
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translates the company’s strategy into action steps. Controlling is the monitoring
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of day-to-day operations to identify any problems that require corrective action.
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Evaluating is the process of comparing a particular period’s actual results to
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planned results, for the purpose of assessing managerial performance. Decision
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making means choosing between alternative courses of action.
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4. Explain how the selection of a particular business strategy ff ff ff ff ff ff ff ff




determines theinformation that managers need to run an
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organization effectively (Unit 1.2)
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To run a business effectively, managers need information that shows how
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well operations are meeting the organization’s strategic goals. For instance, if
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the organization’s strategy is to be a low-cost producer, information about
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product costsand cost variances will be more useful to managers than
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information about researchand development.
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, 1-4 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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5. Discussthe importance of ethical behavior inmanagerial
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accounting (Unit1.3)
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Ethical behavior means knowing right from wrong and then doing the right thing.
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Manycompanies and most professional organizations have codes of conduct to
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guide employees’ actions. Acting unethically can lead to illegal activity and
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ultimately to the destruction of the firm. Furthermore, research has shown that a
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public commitment toethical behavior can lead to superior financial
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performance.
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