1-1 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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Table Of Contents hj hj
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 hj
Accounting as a Tool for Management hj hj hj hj hj
CHAPTER LEARNING OBJECTIVES
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1. Define managerial accounting (Unit 1.1) hj hj hj hj
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- hj hj hj hj hj hj hj
making activities.” hj
2. Describe the differences between managerial and financial accounting( hj hj hj hj hj hj hj h
j
Unit 1.1) hj
Managerial accounting’s primary users are managers and decision makers within an orga
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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.
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Managerial accounting reports focus on operating segments, while financialaccounting st
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atements report results for the organization as a whole. Managerial accounting is concer
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ned more with projecting future results than reporting past results. Managerial informati
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on is prepared to take advantage of a window of opportunity, evenif some accuracy must
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be sacrificed. Financial accounting information is balanced to the penny and is delivered
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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-
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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 tra
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nslates 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. hj hj hj
4. Explain how the selection of a particular business strategy determines thei
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j
nformation that managers need to run an organization effectively (Unit 1.2 hj hj hj hj hj hj hj hj hj hj
)
To run a business effectively, managers need information that shows how well operat
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ions are meeting the organization’s strategic goals. For instance, if the organization’s
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strategy is to be a low- hj hj hj hj hj
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 employe
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es’ actions. Acting unethically can lead to illegal activity and ultimately to the destructio
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n of the firm. Furthermore, research has shown that a public commitment toethical beh
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avior can lead to superior financial performance.
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hj hj hj hj hj hj hj hj
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
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Table Of Contents hj hj
1. Accounting as a Tool for Management
hj hj hj hj hj hj
2.Cost Behavior and Cost Estimation
hj hj hj hj
3. Cost-Volume-Profit Analysis and Pricing Decisions
hj hj hj hj hj
4. Product Costs and Job Order Costing
hj hj hj hj hj hj
5. Planning and Forecasting
hj hj hj
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
hj hj hj hj hj hj hj
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
hj hj hj
13. Statement of Cash Flows
hj hj hj hj hj
,1-3 Test Bank for Davis & Davis, Managerial Accounting, 4/e
hj hj hj hj hj hj hj hj
Chapter 1 hj
Accounting as a Tool for Management hj hj hj hj hj
CHAPTER LEARNING OBJECTIVES
hj hj
1. Define managerial accounting (Unit 1.1) hj hj hj hj
There are several formal definitions of managerial accounting. A simple one is “theg
hj hj hj hj hj hj hj hj hj hj hj hj jh
eneration of relevant information to support management’s decision- hj hj hj hj hj hj hj
making activities.” hj
2. Describe the differences between managerial and financial accounting( hj hj hj hj hj hj hj h
j
Unit 1.1) hj
Managerial accounting’s primary users are managers and decision makers within an orga
hj hj hj hj hj hj hj hj hj hj hj
nization, whereas financial accounting is aimed primarily at external users. Unlike GAAP t
hj hj hj hj hj hj hj hj hj hj hj hj
hat guides financial accounting, there are no mandated rules in managerial accounting.
hj hj hj hj hj hj hj hj hj hj hj hj
Managerial accounting reports focus on operating segments, while financialaccounting st
hj hj hj hj hj hj hj hj jh hj
atements report results for the organization as a whole. Managerial accounting is concer
hj hj hj hj hj hj hj hj hj hj hj hj
ned more with projecting future results than reporting past results. Managerial informati
hj hj hj hj hj hj hj hj hj hj hj
on is prepared to take advantage of a window of opportunity, evenif some accuracy must
hj hj hj hj hj hj hj hj hj hj hj jh hj hj hj h
be sacrificed. Financial accounting information is balanced to the penny and is delivered
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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-
hj hj hj hj hj hj hj hj
term, or strategic planningprovides direction for a five- to ten-year period. Short-
hj hj hj jh hj hj hj hj hj hj hj hj
term or operational planning provides more detailed guidance for the coming year; it tra
hj hj hj hj hj hj hj hj hj hj hj hj hj
nslates the company’s strategy into action steps. Controlling is the monitoring of day-to-
hj hj hj hj hj hj hj hj hj hj hj hj
day operations to identify any problems that require corrective action. Evaluating is the p
hj hj hj hj hj hj hj hj hj hj hj hj hj
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. hj hj hj
4. Explain how the selection of a particular business strategy determines thei
hj hj hj hj hj hj hj hj hj hj h
j
nformation that managers need to run an organization effectively (Unit 1.2 hj hj hj hj hj hj hj hj hj hj
)
To run a business effectively, managers need information that shows how well operat
hj hj hj hj hj hj hj hj hj hj hj hj
ions are meeting the organization’s strategic goals. For instance, if the organization’s
hj hj hj hj hj hj hj hj hj hj hj hj
strategy is to be a low- hj hj hj hj hj
cost producer, information about product costsand cost variances will be more useful
hj hj hj hj hj jh hj hj hj hj hj hj h
to managers than information about researchand development.
j hj hj hj hj hj jh hj
, 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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j
3)
Ethical behavior means knowing right from wrong and then doing the right thing. Manyc
hj hj hj hj hj hj hj hj hj hj hj hj hj jh
ompanies and most professional organizations have codes of conduct to guide employe
hj hj hj hj hj hj hj hj hj hj hj
es’ actions. Acting unethically can lead to illegal activity and ultimately to the destructio
hj hj hj hj hj hj hj hj hj hj hj hj hj
n of the firm. Furthermore, research has shown that a public commitment toethical beh
hj hj hj hj hj hj hj hj hj hj hj hj jh hj
avior can lead to superior financial performance.
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