Chapter2612 6 Managerial26Accounting26and26the26Business26Environ
ment
True/False26Questions
1. Although26financial26and26managerial26accounting26differ26in26many26ways,26they26are26s
imilar26in26that26both26rely26on26the26same26underlying26financial26data.
Answer:26True2 6 2 6 Level:26Medium2 6 2 6 LO:261
2. Managerial26accounting26is26a26branch26of26financial26accounting26and26serves26essent
ially26the26same26purposes26as26financial26accounting.
Answer:26False2 6 2 6 Level:26Medium2 6 2 6 LO:261
3. Managerial26accounting26places26greater26emphasis26on26the26future26than26fi
nancial26accounting,26which26is26primarily26concerned26with26the26past.
Answer:26True2 6 2 6 Level:26Easy2 6 2 6 LO:261
4. Managerial26accounting26is26not26needed26in26a26non-profit26or26governmental26organization.
Answer:26False2 6 2 6 Level:26Easy2 6 2 6 LO:261
5. When26carrying26out26their26planning26activities,26managers26select26a26course26of26a
ction26and26specify26how26the26action26will26be26implemented.
Answer:26True2 6 2 6 Level:26Easy2 6 2 6 LO:262
6. When26carrying26out26their26planning26activities,26managers26obtain26feedback26to26ens
ure26that26the26plan26is26actually26carried26out26and26is26appropriately26modified26as26circ
umstances26change.
Answer:26False2 6 2 6 Level:26Medium2 6 2 6 LO:262
7. The26controller26occupies26a26line26position26in26an26organization.
Answer:26False2 6 2 6 Level:26Easy2 6 2 6 LO:262
8. Decentralization26means26the26delegation26of26decision-
making26authority26throughout26an26organization26by26allowing26managers26at26variou
s26operating26levels26to26make26key26decisions26relating26to26their26own26area26of26resp
onsibility.
Answer:26True2 6 2 6 Level:26Easy2 6 2 6 LO:262
Garrison,26Managerial26Accounting,2612th26Edi 3
tion
,Chapter2612 6 Managerial26Accounting26and26the26Business26Environ
ment
9. A26firm's26organization26chart26will26normally26show26both26the26formal26and26informa
l26lines26of26reporting26and26communication.
Answer:26False2 6 2 6 Level:26Easy2 6 2 6 LO:262
10. The26Chief26Financial26Officer26of26an26organization26is26responsible26for26ensuring2
6that26line26operations26run26smoothly.
Answer:26False2 6 2 6 Level:26Medium2 6 2 6 LO:262
11. Traditionally,26companies26have26maintained26large26amounts26of26raw26materials,26wor
k26in26process,26and26finished26goods26inventories26to26act26as26buffers26so26that26operatio
ns26can26proceed26smoothly26even26if26there26are26unanticipated26disruptions.
Answer:26True2 6 2 6 Level:26Medium2 6 2 6 LO:263
12. Process26Reengineering26is26generally26considered26to26be26a26more26radical26app
roach26to26improvement26than26Total26Quality26Management.
Answer:26True2 6 2 6 Level:26Easy2 6 2 6 LO:263
13. Process26Reengineering26emphasizes26a26team26approach26involving26front-
line26workers,26whereas26Total26Quality26Management26is26usually26implemented26usi
ng26outside26specialists26and26is26imposed26from26above.
Answer:26False2 6 2 6 Level:26Medium2 6 2 6 LO:263
14. If26ethical26standards26were26not26generally26followed,26one26of26the26results26would26pr
obably26be26fewer26goods26and26services26available26in26the26marketplace.
Answer:26True2 6 2 6 Level:26Medium2 6 2 6 LO:264
15. The26Standards26of26Ethical26Conduct26for26Management26Accountants26promulgated26
by26the26Institute26of26Management26Accountants26specifically26state26that26managemen
t26accountants'26sole26ethical26responsibility26is26to26not26break26any26laws.
Answer:26False2 6 2 6 Level:26Easy2 6 2 6 LO:264
4 Garrison,26Managerial26Accounting,2612th26Edi
tion
,Chapter2612 6 Managerial26Accounting26and26the26Business26Environ
ment
Multiple26Choice26Questions
16. Management26accounting26focuses26primarily26on26providing26data26for:
A) internal26uses26by26managers.
B) external26uses26by26stockholders26and26creditors.
C) external26uses26by26the26Internal26Revenue26Service.
D) external26uses26by26the26Securities26and26Exchange26Commission.
Answer:26A2 6 2 6 Level:26Easy2 6 2 6 LO:261
17. Managerial26accounting:
A) is26more26future26oriented26than26financial26accounting.
B) tends26to26summarize26information26more26than26financial26accounting
C) is26primarily26concerned26with26providing26information26to26external26users.
D) is26more26concerned26with26precision26than26timeliness.
Answer:26A2 6 2 6 Level:26Easy2 6 2 6 LO:261
18. Compared26to26financial26accounting,26managerial26accounting26places26more26emphasis26on:
A) the26flexibility26of26information.
B) the26precision26of26information.
C) the26timeliness26of26information.
D) both26A26and26C26above.
Answer:26D2 6 2 6 Level:26Easy2 6 2 6 LO:261
19. The26function26of26management26that26compares26planned26results26to26actual26results26i
s26known26as:
A) planning.
B) directing26and26motivating.
C) controlling.
D) decision26making.
Answer:26C2 6 2 6 Level:26Easy2 6 2 6 LO:262
20. Which26of26the26functions26of26management26involves26overseeing26day-to-day26activities?
A) Planning
B) Directing26and26motivating
C) Controlling
D) Decision26making
Answer:26B2 6 2 6 Level:26Easy2 6 2 6 LO:262
Garrison,26Managerial26Accounting,2612th26Edi 5
tion
, Chapter2612 6 Managerial26Accounting26and26the26Business26Environ
ment
21. Which26of26the26following26is26not26one26of26the26three26basic26activities26of26a26manager?
A) Planning
B) Controlling
C) Directing26and26motivating
D) Compiling26management26accounting26repor
ts26Answer:26D2 6 Level:26Easy2 6 LO:262
22. The26delegation26of26decision26making26to26lower26levels26in26an26organization26is26known26as:
A) the26planning26and26control26cycle.
B) controlling.
C) decentralization.
D) none26of26these.
Answer:26C2 6 2 6 Level:26Easy2 6 2 6 LO:262
23. Which26of26the26following26statements26are26false26concerning26line26and26staff26functions?
I. Persons26occupying26staff26functions26have26authority26over26persons26occupyi
ng26line26functions.
II. Both26line26and26staff26functions26are26depicted26on26the26organization26chart.
III. Line26functions26are26directly26related26to26the26basic26objectives26of26an26organization.
A) Only26I
B) Only26II
C) Only26I26and26II
D) I,26II,26and26III
Answer:26A2 6 2 6 Level:26Medium2 6 2 6 LO:262
24. Which26of26following26would26normally26be26found26on26a26manufacturing26co
mpany's26organization26chart?
A) the26layout26of26the26factory26assembly26lines
B) a26list26of26the26materials26needed26to26produce26each26of26the26company's26products
C) the26informal26lines26of26reporting26and26communication
D) none26of26the26above
Answer:26D2 6 2 6 Level:26Easy2 6 2 6 LO:262
6 Garrison,26Managerial26Accounting,2612th26Edi
tion
ment
True/False26Questions
1. Although26financial26and26managerial26accounting26differ26in26many26ways,26they26are26s
imilar26in26that26both26rely26on26the26same26underlying26financial26data.
Answer:26True2 6 2 6 Level:26Medium2 6 2 6 LO:261
2. Managerial26accounting26is26a26branch26of26financial26accounting26and26serves26essent
ially26the26same26purposes26as26financial26accounting.
Answer:26False2 6 2 6 Level:26Medium2 6 2 6 LO:261
3. Managerial26accounting26places26greater26emphasis26on26the26future26than26fi
nancial26accounting,26which26is26primarily26concerned26with26the26past.
Answer:26True2 6 2 6 Level:26Easy2 6 2 6 LO:261
4. Managerial26accounting26is26not26needed26in26a26non-profit26or26governmental26organization.
Answer:26False2 6 2 6 Level:26Easy2 6 2 6 LO:261
5. When26carrying26out26their26planning26activities,26managers26select26a26course26of26a
ction26and26specify26how26the26action26will26be26implemented.
Answer:26True2 6 2 6 Level:26Easy2 6 2 6 LO:262
6. When26carrying26out26their26planning26activities,26managers26obtain26feedback26to26ens
ure26that26the26plan26is26actually26carried26out26and26is26appropriately26modified26as26circ
umstances26change.
Answer:26False2 6 2 6 Level:26Medium2 6 2 6 LO:262
7. The26controller26occupies26a26line26position26in26an26organization.
Answer:26False2 6 2 6 Level:26Easy2 6 2 6 LO:262
8. Decentralization26means26the26delegation26of26decision-
making26authority26throughout26an26organization26by26allowing26managers26at26variou
s26operating26levels26to26make26key26decisions26relating26to26their26own26area26of26resp
onsibility.
Answer:26True2 6 2 6 Level:26Easy2 6 2 6 LO:262
Garrison,26Managerial26Accounting,2612th26Edi 3
tion
,Chapter2612 6 Managerial26Accounting26and26the26Business26Environ
ment
9. A26firm's26organization26chart26will26normally26show26both26the26formal26and26informa
l26lines26of26reporting26and26communication.
Answer:26False2 6 2 6 Level:26Easy2 6 2 6 LO:262
10. The26Chief26Financial26Officer26of26an26organization26is26responsible26for26ensuring2
6that26line26operations26run26smoothly.
Answer:26False2 6 2 6 Level:26Medium2 6 2 6 LO:262
11. Traditionally,26companies26have26maintained26large26amounts26of26raw26materials,26wor
k26in26process,26and26finished26goods26inventories26to26act26as26buffers26so26that26operatio
ns26can26proceed26smoothly26even26if26there26are26unanticipated26disruptions.
Answer:26True2 6 2 6 Level:26Medium2 6 2 6 LO:263
12. Process26Reengineering26is26generally26considered26to26be26a26more26radical26app
roach26to26improvement26than26Total26Quality26Management.
Answer:26True2 6 2 6 Level:26Easy2 6 2 6 LO:263
13. Process26Reengineering26emphasizes26a26team26approach26involving26front-
line26workers,26whereas26Total26Quality26Management26is26usually26implemented26usi
ng26outside26specialists26and26is26imposed26from26above.
Answer:26False2 6 2 6 Level:26Medium2 6 2 6 LO:263
14. If26ethical26standards26were26not26generally26followed,26one26of26the26results26would26pr
obably26be26fewer26goods26and26services26available26in26the26marketplace.
Answer:26True2 6 2 6 Level:26Medium2 6 2 6 LO:264
15. The26Standards26of26Ethical26Conduct26for26Management26Accountants26promulgated26
by26the26Institute26of26Management26Accountants26specifically26state26that26managemen
t26accountants'26sole26ethical26responsibility26is26to26not26break26any26laws.
Answer:26False2 6 2 6 Level:26Easy2 6 2 6 LO:264
4 Garrison,26Managerial26Accounting,2612th26Edi
tion
,Chapter2612 6 Managerial26Accounting26and26the26Business26Environ
ment
Multiple26Choice26Questions
16. Management26accounting26focuses26primarily26on26providing26data26for:
A) internal26uses26by26managers.
B) external26uses26by26stockholders26and26creditors.
C) external26uses26by26the26Internal26Revenue26Service.
D) external26uses26by26the26Securities26and26Exchange26Commission.
Answer:26A2 6 2 6 Level:26Easy2 6 2 6 LO:261
17. Managerial26accounting:
A) is26more26future26oriented26than26financial26accounting.
B) tends26to26summarize26information26more26than26financial26accounting
C) is26primarily26concerned26with26providing26information26to26external26users.
D) is26more26concerned26with26precision26than26timeliness.
Answer:26A2 6 2 6 Level:26Easy2 6 2 6 LO:261
18. Compared26to26financial26accounting,26managerial26accounting26places26more26emphasis26on:
A) the26flexibility26of26information.
B) the26precision26of26information.
C) the26timeliness26of26information.
D) both26A26and26C26above.
Answer:26D2 6 2 6 Level:26Easy2 6 2 6 LO:261
19. The26function26of26management26that26compares26planned26results26to26actual26results26i
s26known26as:
A) planning.
B) directing26and26motivating.
C) controlling.
D) decision26making.
Answer:26C2 6 2 6 Level:26Easy2 6 2 6 LO:262
20. Which26of26the26functions26of26management26involves26overseeing26day-to-day26activities?
A) Planning
B) Directing26and26motivating
C) Controlling
D) Decision26making
Answer:26B2 6 2 6 Level:26Easy2 6 2 6 LO:262
Garrison,26Managerial26Accounting,2612th26Edi 5
tion
, Chapter2612 6 Managerial26Accounting26and26the26Business26Environ
ment
21. Which26of26the26following26is26not26one26of26the26three26basic26activities26of26a26manager?
A) Planning
B) Controlling
C) Directing26and26motivating
D) Compiling26management26accounting26repor
ts26Answer:26D2 6 Level:26Easy2 6 LO:262
22. The26delegation26of26decision26making26to26lower26levels26in26an26organization26is26known26as:
A) the26planning26and26control26cycle.
B) controlling.
C) decentralization.
D) none26of26these.
Answer:26C2 6 2 6 Level:26Easy2 6 2 6 LO:262
23. Which26of26the26following26statements26are26false26concerning26line26and26staff26functions?
I. Persons26occupying26staff26functions26have26authority26over26persons26occupyi
ng26line26functions.
II. Both26line26and26staff26functions26are26depicted26on26the26organization26chart.
III. Line26functions26are26directly26related26to26the26basic26objectives26of26an26organization.
A) Only26I
B) Only26II
C) Only26I26and26II
D) I,26II,26and26III
Answer:26A2 6 2 6 Level:26Medium2 6 2 6 LO:262
24. Which26of26following26would26normally26be26found26on26a26manufacturing26co
mpany's26organization26chart?
A) the26layout26of26the26factory26assembly26lines
B) a26list26of26the26materials26needed26to26produce26each26of26the26company's26products
C) the26informal26lines26of26reporting26and26communication
D) none26of26the26above
Answer:26D2 6 2 6 Level:26Easy2 6 2 6 LO:262
6 Garrison,26Managerial26Accounting,2612th26Edi
tion
