TEST BANK
Financial and Managerial Accounting:
Managerial Chapters, 7th Edition
(Miller-Nobles) Chapter 1-11
,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
AICPA Functional: Reporting
, PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
9) Managerial accounting information for a company is primarily used by .
A) its customers to understand the pricing of the product
B) its creditors to understand the credibility of the business
C) its employees to plan, direct and control operations
D) its investors to make their investment decisions
Answer: C
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
10) Which fof fthe ffollowing fstatements fis ftrue fof ffinancial faccounting?
A) It fprovides finformation fto finvestors fneeded ffor ftheir finvestment fdecisions.
B) It fprovides ffuture ffocused finformation fneeded ffor fmanaging fand fdelegating foperations.
C) It ffocuses fon fdetailed freports ffor fparts fof fthe fcompany frather fthan fthe fwhole fcompany.
D) It ffocuses fon fplanning, fdirecting fand fcontrolling fday-to-day
foperations.fAnswer: f A
Diff: f1
LO: f M:1-1
AACSB: f Application fof fknowledge
fAICPA fFunctional: f Reporting
PE fQuestion fType: f Concept
H2: f Why fIs fManagerial fAccounting fImportant? f(H1)
11) Which fof fthe ffollowing fis fthe fprimary ffocus fof fmanagerial faccounting?
A) providing finformation fthat fmanagers fneed fto fmake foperational fdecisions
B) providing fhistorical fdata fto finvestors fand fcreditors
C) providing fsummarized fresults fof foperations
D) providing finformation fto fcomply fwith flaws fand fregulations fof fgovernment
fbodiesfAnswer: f A
Diff: f1
LO: f M:1-1
AACSB: f Application fof fknowledge
fAICPA fFunctional: f Reporting
PE fQuestion fType: f Concept
H2: f Why fIs fManagerial fAccounting fImportant? f(H1)
12) Which fof fthe ffollowing fis fthe fprimary ffocus fof ffinancial faccounting?
A) providing finformation fthat fmanagers fneed fto fmake foperational fdecisions
B) providing fsummarized finformation fon foperational fresults fto finvestors fand fcreditors
C) providing finformation fto fmanagers fto fassist fin fplanning, fdirecting fand fcontrolling foperations
D) providing fhighly fdetailed finformation fon fproduct flines, fregions, fand
fdivisionsfAnswer: f B
Diff: f1
LO: f M:1-1
AACSB: f Application fof fknowledge
Financial and Managerial Accounting:
Managerial Chapters, 7th Edition
(Miller-Nobles) Chapter 1-11
,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
AICPA Functional: Reporting
, PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
9) Managerial accounting information for a company is primarily used by .
A) its customers to understand the pricing of the product
B) its creditors to understand the credibility of the business
C) its employees to plan, direct and control operations
D) its investors to make their investment decisions
Answer: C
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
10) Which fof fthe ffollowing fstatements fis ftrue fof ffinancial faccounting?
A) It fprovides finformation fto finvestors fneeded ffor ftheir finvestment fdecisions.
B) It fprovides ffuture ffocused finformation fneeded ffor fmanaging fand fdelegating foperations.
C) It ffocuses fon fdetailed freports ffor fparts fof fthe fcompany frather fthan fthe fwhole fcompany.
D) It ffocuses fon fplanning, fdirecting fand fcontrolling fday-to-day
foperations.fAnswer: f A
Diff: f1
LO: f M:1-1
AACSB: f Application fof fknowledge
fAICPA fFunctional: f Reporting
PE fQuestion fType: f Concept
H2: f Why fIs fManagerial fAccounting fImportant? f(H1)
11) Which fof fthe ffollowing fis fthe fprimary ffocus fof fmanagerial faccounting?
A) providing finformation fthat fmanagers fneed fto fmake foperational fdecisions
B) providing fhistorical fdata fto finvestors fand fcreditors
C) providing fsummarized fresults fof foperations
D) providing finformation fto fcomply fwith flaws fand fregulations fof fgovernment
fbodiesfAnswer: f A
Diff: f1
LO: f M:1-1
AACSB: f Application fof fknowledge
fAICPA fFunctional: f Reporting
PE fQuestion fType: f Concept
H2: f Why fIs fManagerial fAccounting fImportant? f(H1)
12) Which fof fthe ffollowing fis fthe fprimary ffocus fof ffinancial faccounting?
A) providing finformation fthat fmanagers fneed fto fmake foperational fdecisions
B) providing fsummarized finformation fon foperational fresults fto finvestors fand fcreditors
C) providing finformation fto fmanagers fto fassist fin fplanning, fdirecting fand fcontrolling foperations
D) providing fhighly fdetailed finformation fon fproduct flines, fregions, fand
fdivisionsfAnswer: f B
Diff: f1
LO: f M:1-1
AACSB: f Application fof fknowledge
