Test Bank for Managerial Accounting, 5th Edition by Stacey Whitecotton
Answers Included ✅
Chapter 01 5e ⊚ true
⊚ false
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Financial accounting information is generally used exclusively by internal parties such as
managers. 8) The term "big data" refers to the volume, velocity, and veracity of data.
⊚ true ⊚ true
⊚ false ⊚ false
2) Financial accounting information is reported for the company as a whole. 9) Predictive analytics is the process of recommending a course of action based upon
⊚ true meaningful patterns and insights from collected data.
⊚ false ⊚ true
⊚ false
3) Managers must direct, lead, and motivate during the implementation function.
⊚ true 10) Descriptive analytics uses patterns and insights from collected data to show what has
⊚ false happened.
⊚ true
⊚ false
4) Managers of small, private corporations use managerial accounting information, whereas
managers of large, public corporations use financial accounting information.
⊚ true 11) An opportunity cost is the cost of not doing something.
⊚ false ⊚ true
⊚ false
5) The Sarbanes-Oxley Act of 2002 places full responsibility on the board of directors for
the accuracy of the reporting system. 12) Whether a cost is treated as direct or indirect depends on whether tracing the cost is both
⊚ true possible and practical.
⊚ false ⊚ true
⊚ false
6) The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting
reporting environment: ethics, fraud, and management. 13) Variable costs are always direct costs.
⊚ true ⊚ true
⊚ false ⊚ false
7) A sustainable business is one with the ability to meet the needs of today without 14) Fixed costs stay the same, on a per-unit basis, as activity level changes.
sacrificing the ability of future generations to meet their own needs. ⊚ true
⊚ false
1 2
, MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
15) Prime costs include direct materials, direct labor, and manufacturing overhead. 22) What is the primary goal of accounting?
⊚ true
⊚ false A) To set long-term goals and objectives
B) To arrange for the necessary resources to achieve a plan
C) To provide information for decision-making
16) All manufacturing costs are treated as product costs. D) To motivate others to work towards a plan's success
⊚ true
⊚ false
23) Of the following groups, which is the primary user of managerial accounting
information?
17) All manufacturing costs are inventoriable costs.
⊚ true
A) Investors
⊚ false
B) Creditors
C) Regulators
D) Managers
18) A cost that will occur in the future and differs between various alternatives under
consideration is a relevant cost.
⊚ true
⊚ false 24) Managerial accounting, as compared to financial accounting, is primarily intended to
facilitate:
19) Managerial accounting information is mandated by the SEC and other regulatory A) understanding the GAAP.
agencies. B) making decisions with timely, relevant information.
⊚ true C) conducting ethics investigations under SOX.
⊚ false D) reporting results to shareholders.
20) Managerial accounting information is considered proprietary in nature.
25) Managerial accounting information includes all of the following except:
⊚ true
⊚ false
A) budgets.
B) performance evaluations, for example, budget-to-actual reports.
C) cost reports.
21) Opportunity costs occur in business when resources are constrained.
D) financial statements prepared in accordance with generally accepted accounting
⊚ true
principles.
⊚ false
26) Which of the following is not a characteristic of financial accounting?
3 4
, A) Financial reports are prepared according to GAAP. 31) Which of the following is not a characteristic of managerial accounting?
B) Information is used by external parties.
C) Information is subjective, relevant, and future-oriented. A) Information is used by internal parties.
D) Reports are prepared periodically. B) Information is subjective, relevant, and future-oriented.
C) Reports are prepared as needed.
D) Information is reported for the company as a whole.
27) Which of the following is not a characteristic of financial accounting?
A) Information is reported at the decision-making level. 32) Which of the following types of reports is more characteristic of managerial accounting
B) Information is used by external parties. than financial accounting?
C) Information is objective, reliable, and historical.
D) Reports are prepared periodically. A) An internal report used by management
B) An external report used by investors
C) A report prepared according to GAAP
D) A report prepared periodically (monthly, quarterly, annually)
28) Which of the following is not a characteristic of financial accounting?
A) Financial reports are prepared according to GAAP.
B) Information is used primarily by internal parties. 33) The controlling function is:
C) Information is objective, reliable, and historical.
D) Reports are prepared periodically. A) comparing actual with budgeted results and taking corrective action when needed.
B) arranging of the necessary resources to carry out the plan.
C) directing, leading, and motivating those necessary to carry out the plan.
D) drafting the goals and strategies to achieve long-term results.
29) Which of the following is not a characteristic of managerial accounting?
A) Information is used by internal parties.
B) Information is subjective, relevant, and future-oriented. 34) During the last fiscal year, XYZ Organization implemented managerial accounting to
C) Reports are prepared as needed. allocate program costs to its soup kitchen. The kitchen's manager is reviewing actual results from
D) Reports are prepared according to GAAP. the prior month to compare the outcomes with the organization's objectives. Which function of
the Plan-Implement-Control cycle is she conducting?
A) Plan
30) Which of the following is not a characteristic of managerial accounting?
B) Implement
C) Control
A) Information is used by external parties.
D) Strategize
B) Information is subjective, relevant, and future-oriented.
C) Reports are prepared as needed.
D) Information is reported at the decision-making level.
5 6
, 35) Which of the following types of organizations purchases raw materials from suppliers 39) Which of the following functions of management involves comparing actual results with
and uses them to create a finished product? budgeted results?
A) Manufacturing firms A) Planning
B) Merchandising companies B) Implementing
C) Service companies C) Reviewing
D) Retailers D) Controlling
36) Hair salons and law firms are examples of which of the following types of organizations? 40) Which of the following functions of management involves setting goals or objectives and
establishing the tactics to achieve them?
A) Retailers
B) Service companies A) Planning
C) Manufacturing firms B) Implementing
D) Merchandising companies C) Reviewing
D) Controlling
37) Which of the following types of organizations sell goods to the general public?
41) Which of the following functions of management involves arranging for the necessary
A) Service companies resources to carry out the plan?
B) Manufacturing firms
C) Wholesalers A) Planning
D) Retailers B) Implementing
C) Reviewing
D) Controlling
38) Which of the following statements about the use of managerial accounting information in
nonprofit organizations is true?
42) Which of the following functions of management involves providing motivation to
A) Universities do not exist strictly to earn profit for shareholders, so managerial achieve results?
accounting information is not vital to their operations.
B) Unlike other nonprofits, hospitals (which exist with a focus on financial results in A) Planning
addition to health metrics) make use of managerial accounting. B) Implementing
C) Because managers of nonprofit organizations need timely and relevant information to C) Reviewing
make decisions, managerial accounting is vital to these organizations. D) Controlling
D) Because nonprofit organizations—hospitals, educational institutions, charities—do not
exist with a profit motive, they do not use managerial accounting principles.
43) Which of the following functions of management involves taking corrective action if
needed?
7 8
Answers Included ✅
Chapter 01 5e ⊚ true
⊚ false
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Financial accounting information is generally used exclusively by internal parties such as
managers. 8) The term "big data" refers to the volume, velocity, and veracity of data.
⊚ true ⊚ true
⊚ false ⊚ false
2) Financial accounting information is reported for the company as a whole. 9) Predictive analytics is the process of recommending a course of action based upon
⊚ true meaningful patterns and insights from collected data.
⊚ false ⊚ true
⊚ false
3) Managers must direct, lead, and motivate during the implementation function.
⊚ true 10) Descriptive analytics uses patterns and insights from collected data to show what has
⊚ false happened.
⊚ true
⊚ false
4) Managers of small, private corporations use managerial accounting information, whereas
managers of large, public corporations use financial accounting information.
⊚ true 11) An opportunity cost is the cost of not doing something.
⊚ false ⊚ true
⊚ false
5) The Sarbanes-Oxley Act of 2002 places full responsibility on the board of directors for
the accuracy of the reporting system. 12) Whether a cost is treated as direct or indirect depends on whether tracing the cost is both
⊚ true possible and practical.
⊚ false ⊚ true
⊚ false
6) The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting
reporting environment: ethics, fraud, and management. 13) Variable costs are always direct costs.
⊚ true ⊚ true
⊚ false ⊚ false
7) A sustainable business is one with the ability to meet the needs of today without 14) Fixed costs stay the same, on a per-unit basis, as activity level changes.
sacrificing the ability of future generations to meet their own needs. ⊚ true
⊚ false
1 2
, MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
15) Prime costs include direct materials, direct labor, and manufacturing overhead. 22) What is the primary goal of accounting?
⊚ true
⊚ false A) To set long-term goals and objectives
B) To arrange for the necessary resources to achieve a plan
C) To provide information for decision-making
16) All manufacturing costs are treated as product costs. D) To motivate others to work towards a plan's success
⊚ true
⊚ false
23) Of the following groups, which is the primary user of managerial accounting
information?
17) All manufacturing costs are inventoriable costs.
⊚ true
A) Investors
⊚ false
B) Creditors
C) Regulators
D) Managers
18) A cost that will occur in the future and differs between various alternatives under
consideration is a relevant cost.
⊚ true
⊚ false 24) Managerial accounting, as compared to financial accounting, is primarily intended to
facilitate:
19) Managerial accounting information is mandated by the SEC and other regulatory A) understanding the GAAP.
agencies. B) making decisions with timely, relevant information.
⊚ true C) conducting ethics investigations under SOX.
⊚ false D) reporting results to shareholders.
20) Managerial accounting information is considered proprietary in nature.
25) Managerial accounting information includes all of the following except:
⊚ true
⊚ false
A) budgets.
B) performance evaluations, for example, budget-to-actual reports.
C) cost reports.
21) Opportunity costs occur in business when resources are constrained.
D) financial statements prepared in accordance with generally accepted accounting
⊚ true
principles.
⊚ false
26) Which of the following is not a characteristic of financial accounting?
3 4
, A) Financial reports are prepared according to GAAP. 31) Which of the following is not a characteristic of managerial accounting?
B) Information is used by external parties.
C) Information is subjective, relevant, and future-oriented. A) Information is used by internal parties.
D) Reports are prepared periodically. B) Information is subjective, relevant, and future-oriented.
C) Reports are prepared as needed.
D) Information is reported for the company as a whole.
27) Which of the following is not a characteristic of financial accounting?
A) Information is reported at the decision-making level. 32) Which of the following types of reports is more characteristic of managerial accounting
B) Information is used by external parties. than financial accounting?
C) Information is objective, reliable, and historical.
D) Reports are prepared periodically. A) An internal report used by management
B) An external report used by investors
C) A report prepared according to GAAP
D) A report prepared periodically (monthly, quarterly, annually)
28) Which of the following is not a characteristic of financial accounting?
A) Financial reports are prepared according to GAAP.
B) Information is used primarily by internal parties. 33) The controlling function is:
C) Information is objective, reliable, and historical.
D) Reports are prepared periodically. A) comparing actual with budgeted results and taking corrective action when needed.
B) arranging of the necessary resources to carry out the plan.
C) directing, leading, and motivating those necessary to carry out the plan.
D) drafting the goals and strategies to achieve long-term results.
29) Which of the following is not a characteristic of managerial accounting?
A) Information is used by internal parties.
B) Information is subjective, relevant, and future-oriented. 34) During the last fiscal year, XYZ Organization implemented managerial accounting to
C) Reports are prepared as needed. allocate program costs to its soup kitchen. The kitchen's manager is reviewing actual results from
D) Reports are prepared according to GAAP. the prior month to compare the outcomes with the organization's objectives. Which function of
the Plan-Implement-Control cycle is she conducting?
A) Plan
30) Which of the following is not a characteristic of managerial accounting?
B) Implement
C) Control
A) Information is used by external parties.
D) Strategize
B) Information is subjective, relevant, and future-oriented.
C) Reports are prepared as needed.
D) Information is reported at the decision-making level.
5 6
, 35) Which of the following types of organizations purchases raw materials from suppliers 39) Which of the following functions of management involves comparing actual results with
and uses them to create a finished product? budgeted results?
A) Manufacturing firms A) Planning
B) Merchandising companies B) Implementing
C) Service companies C) Reviewing
D) Retailers D) Controlling
36) Hair salons and law firms are examples of which of the following types of organizations? 40) Which of the following functions of management involves setting goals or objectives and
establishing the tactics to achieve them?
A) Retailers
B) Service companies A) Planning
C) Manufacturing firms B) Implementing
D) Merchandising companies C) Reviewing
D) Controlling
37) Which of the following types of organizations sell goods to the general public?
41) Which of the following functions of management involves arranging for the necessary
A) Service companies resources to carry out the plan?
B) Manufacturing firms
C) Wholesalers A) Planning
D) Retailers B) Implementing
C) Reviewing
D) Controlling
38) Which of the following statements about the use of managerial accounting information in
nonprofit organizations is true?
42) Which of the following functions of management involves providing motivation to
A) Universities do not exist strictly to earn profit for shareholders, so managerial achieve results?
accounting information is not vital to their operations.
B) Unlike other nonprofits, hospitals (which exist with a focus on financial results in A) Planning
addition to health metrics) make use of managerial accounting. B) Implementing
C) Because managers of nonprofit organizations need timely and relevant information to C) Reviewing
make decisions, managerial accounting is vital to these organizations. D) Controlling
D) Because nonprofit organizations—hospitals, educational institutions, charities—do not
exist with a profit motive, they do not use managerial accounting principles.
43) Which of the following functions of management involves taking corrective action if
needed?
7 8
