TEST BANK
FINANCIAL AND MANAGERIAL ACCOUNTING
MANAGERIAL CHAPTERS
7TH EDITION
CHAPTER M:1: INTRODUCTION TO MANAGERIAL ACCOUNTING
LEARNING OBJECTIVE M:1-1
1) Managerial accounting focuses on providing information for internal planning and
control.
Answer: TRUE
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
2) Financial accounting prepares reports for internal purposes, whereas managerial
accounting provides information to external stakeholders.
Answer: FALSE
Explanation: The reverse is true. Financial accounting serves external stakeholder
information needs while managerial accounting serves the needs of managers and
internal staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
,PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
3) Financial statements prepared for investors and creditors often include forward-
looking information because they make decisions based on a company's future
prospects.
Answer: FALSE
Explanation: Financial statements provide mostly historical information; relevant and
faithfully representative information and focused on the past.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
4) Managerial accounting reporting by a public firm is required to follow the rules of
GAAP.
Answer: FALSE
Explanation: Managerial accounting information is not guided by GAAP but rather by
the concept of usefulness to management for decision making purposes.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
,5) Financial reporting is typically much more detailed than managerial accounting.
Answer: FALSE
Explanation: Financial reporting is typically less detailed than managerial accounting
information. Financial accounting reporting is usually summary reports, prepared
primarily on the company as a whole, usually on a quarterly or annual basis.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
6) Managerial accounting provides financial statements that report results of operations,
financial position, and cash flows both to managers and to external stockholders.
Answer: FALSE
Explanation: Managerial accounting provides the information needed to plan and
control operations and therefore serves the information needs of internal parties such as
managers and staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
7) Which of the following is a focus of managerial accounting?
, A) to generate a company's financial statements for tax reporting
B) to provide information to business managers to assist them in controlling their
businesses
C) to provide information to shareholders to assist them with their investment decisions
D) to ensure that the reports produced for internal and external business purposes are
GAAP compliant
Answer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
8) Which of the following statements is true of managerial accounting?
A) The external stakeholders of a company are the primary users of managerial
accounting.
B) Managerial accounting information is used to help managers plan, direct and control
their operations.
C) An external audit by an independent CPA is required for managerial accounting
information.
D) Managerial accounting information must comply with Generally Accepted
Accounting Principles.
Answer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
FINANCIAL AND MANAGERIAL ACCOUNTING
MANAGERIAL CHAPTERS
7TH EDITION
CHAPTER M:1: INTRODUCTION TO MANAGERIAL ACCOUNTING
LEARNING OBJECTIVE M:1-1
1) Managerial accounting focuses on providing information for internal planning and
control.
Answer: TRUE
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
2) Financial accounting prepares reports for internal purposes, whereas managerial
accounting provides information to external stakeholders.
Answer: FALSE
Explanation: The reverse is true. Financial accounting serves external stakeholder
information needs while managerial accounting serves the needs of managers and
internal staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
,PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
3) Financial statements prepared for investors and creditors often include forward-
looking information because they make decisions based on a company's future
prospects.
Answer: FALSE
Explanation: Financial statements provide mostly historical information; relevant and
faithfully representative information and focused on the past.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
4) Managerial accounting reporting by a public firm is required to follow the rules of
GAAP.
Answer: FALSE
Explanation: Managerial accounting information is not guided by GAAP but rather by
the concept of usefulness to management for decision making purposes.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
,5) Financial reporting is typically much more detailed than managerial accounting.
Answer: FALSE
Explanation: Financial reporting is typically less detailed than managerial accounting
information. Financial accounting reporting is usually summary reports, prepared
primarily on the company as a whole, usually on a quarterly or annual basis.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
6) Managerial accounting provides financial statements that report results of operations,
financial position, and cash flows both to managers and to external stockholders.
Answer: FALSE
Explanation: Managerial accounting provides the information needed to plan and
control operations and therefore serves the information needs of internal parties such as
managers and staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
7) Which of the following is a focus of managerial accounting?
, A) to generate a company's financial statements for tax reporting
B) to provide information to business managers to assist them in controlling their
businesses
C) to provide information to shareholders to assist them with their investment decisions
D) to ensure that the reports produced for internal and external business purposes are
GAAP compliant
Answer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
8) Which of the following statements is true of managerial accounting?
A) The external stakeholders of a company are the primary users of managerial
accounting.
B) Managerial accounting information is used to help managers plan, direct and control
their operations.
C) An external audit by an independent CPA is required for managerial accounting
information.
D) Managerial accounting information must comply with Generally Accepted
Accounting Principles.
Answer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
