Test Bank for Cost Accounting Horngren Latest 2026–2027 Updated Managerial Accounting Questions and Answers. Verified Problems for All Chapters and Concepts. Complete Coverage for Exam Preparation and High Academic Performance.

CHAPTER 1
THE ACCOUNTANT’S ROLE IN THE
ORGANIZATION

TRUE/FALSE

1. Management accounting information focuses on external reporting. L L L L L




Answer: False Difficulty: 1 Objective: 1
Terms to Learn:
L L management accounting L L



Management accounting information focuses on internal reporting.
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2. A good cost accounting system is narrowly focused on a continuous reduction of
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costs.

Answer: False Difficulty: 2 Objective: 1
Terms to Learn:
L L cost accounting L



A good cost accounting system is broadly focused to provide information that helps
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managers at all levels implement, monitor, and evaluate company strategies.
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3. Modern cost accounting plays a significant role in management decision making.
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Answer: True Difficulty: 1 Objective: 1
Terms to Learn:
L L cost accounting L




4. The balance sheet, income statement, and statement of cash flows are used for
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financial accounting, but not for management accounting.
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Answer: False Difficulty: 1 Objective: 1
Terms to Learn:
L L financial accounting L



The balance sheet, income statement, and statement of cash flows are used for
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financial accounting and also for management accounting.
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5. Financial accounting is broader in scope than management accounting.
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Answer: False L Difficulty: 2
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Terms to Learn:
L L financial accounting, management accounting L L L L



Management accounting is broader in scope than financial accounting.
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6. Cost accounting measures and reports short-term, long-term, financial, and
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nonfinancial information. L




Answer: True Difficulty: 2 Objective: 1
Terms to Learn:
L L cost accounting L




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,7. Cost management provides information that helps increase value for customers.
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Answer: True Difficulty: 1 Objective: 1
Terms to Learn:L L cost management L




8. An ideal database should consist of data that could be used for a single purpose
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only.

Answer: False Difficulty: 2 Objective: 1
Terms to Learn:L L management accounting L



An ideal database should be able to be used for multiple purposes.
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9. An Enterprise Resource Planning (ERP) System is a single database that collects
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data and feeds into applications that support each of the company’s business
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activities, such as purchases, production, distribution, and sales.
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Answer: True Difficulty: 1 Objective: 1
Terms to Learn:L management accounting

10. Cost accounting provides information only for management accounting purposes.
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Answer: False Difficulty: 1 Objective: 1
Terms to Learn:L L cost accounting L



Cost accounting provides information for financial accounting as well as for
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management accounting purposes.L L




11. Cost management involves long-term and short-term decisions that attempt to
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increase value for customers and lower costs of products or services.
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Answer: True Difficulty: 1 Objective: 1
Terms to Learn:L L cost management L




12. All strategies should be evaluated regarding the resources and capabilities of the
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company.

Answer: True Difficulty: 1 Objective: 2
Terms to Learn:L strategy

13. The best-designed strategies are valuable whether or not they are effectively
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implemented.

Answer: False Difficulty: 1 Objective: 2
Terms to Learn:L L strategy L



Implementation is essential or the strategy is useless.
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,14. The key to a company’s success is creating value for customers while differentiating
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itself from its competitors.
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Answer: True Difficulty: 1 Objective: 2
Terms to Learn:
L strategy

15. The key to a company’s success is always to be the low cost producer in a particular
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industry.

Answer: False Difficulty: 2 Objective: 2
Terms to Learn:
L L strategy
The low cost producer in a particular industry will not necessarily be successful.
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16. Companies generally follow one of two basic strategies: 1) providing a quality
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product or service at low prices, or 2) offering a unique product or service often
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priced higher than competing products.
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Answer: True Difficulty: 2 Objective: 2
Terms to Learn:
L strategy

17. Management accountants should have little or no role in deciding on a company’s
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strategy.

Answer: False Difficulty: 1 Objective: 2
Terms to Learn:
L L strategy
Management accountants should play a significant role in deciding on a company’s
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strategy.

18. Companies can decide on an appropriate strategy based strictly on internally
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available information. L




Answer: False Difficulty: 1 Objective: 2
Terms to Learn:
L L strategy
Companies must obtain external information as well as internal information to
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decide on an appropriate strategy.
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19. Strategic cost management describes cost management that specifically focuses on
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strategic issues. L




Answer: True Difficulty: 1 Objective: 2
Terms to Learn:
L L strategic cost management L L




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, 20. The supply chain refers to the sequence of business functions in which customer
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usefulness is added to products or services.
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Answer: False Difficulty: 1 Objective: 3
Terms to Learn: L L supply chain L



The value chain refers to the sequence of business functions in which customer
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usefulness is added to products or services.
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21. An effective way to cut costs is to eliminate activities that do not improve the
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product attributes that customers value.
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Answer: True Difficulty: 1 Objective: 3
Terms to Learn: L L cost management L




22. For optimal planning success it is best if each business function within the value
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chain is performed one at a time in sequence.
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Answer: False Difficulty: 1 Objective: 3
Terms to Learn: L Lvalue chain L



Optimally, success is achieved when two or more of the individual business
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functions work concurrently as a team.
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23. For best results, cost management emphasizes independently coordinating supply
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chain activities within your company and not interfering with other companies.
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Answer: False Difficulty: 2 Objective: 3
Terms to Learn: L Lcost management L



Cost management emphasizes integrating and coordinating supply chain activities
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across all companies within the supply chain.
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24. Technological innovation has led to shorter product-life cycles and a need to bring
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new products to market more rapidly.
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Answer: True Difficulty: 1 Objective: 3
Terms to Learn: L L design of products, services, or processes
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25. Key success factors include cost, quality, timeliness, and innovation.
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Answer: True Difficulty: 1 Objective: 3
Terms to Learn: L value chain L




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