Garrison, Managerial Accounting, 12th Edition
ju ju ju ju 3
, Chapter 1 u
j ju ju Managerial Accounting and the Business Environment ju u
j ju ju ju
True/False Questions
ju
1. Although financial and managerial accounting differ in many ways, they are similar
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in that both rely on the same underlying financial data.
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Answer: True ju j u Level: Medium LO: 1 ju ju
2. Managerial accounting is a branch of financial accounting and serves essentially the
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same purposes as financial accounting.
ju ju ju ju ju
Answer: False ju j u Level: Medium LO: 1 ju ju
3. Managerial accounting places greater emphasis on the future than financial
ju ju ju ju ju ju ju ju ju
accounting, which is primarily concerned with the past.
ju ju ju ju ju ju ju ju
Answer: True ju j u Level: Easy ju j u LO: 1 ju
4. Managerial accounting is not needed in a non-profit or governmental organization.
ju ju ju ju ju ju ju ju ju ju
Answer: False Level: Easy ju j u ju LO: 1 ju
5. When carrying out their planning activities, managers select a course of action and
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specify how the action will be implemented.
ju ju ju ju ju ju ju
Answer: True ju j u Level: Easy ju j u LO: 2 ju
6. When carrying out their planning activities, managers obtain feedback to ensure
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that the plan is actually carried out and is appropriately modified as circumstances
ju ju ju ju ju ju ju ju ju ju ju ju ju
change.
ju
Answer: False ju j u Level: Medium LO: 2 ju ju
7. The controller occupies a line position in an organization.
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Answer: False Level: Easy ju j u ju LO: 2 ju
8. Decentralization means the delegation of decision-making authority throughout ju ju ju ju ju ju ju
an organization by allowing managers at various operating levels to make key
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decisions relating to their own area of responsibility.
ju ju ju ju ju ju ju ju
Answer: True ju j u Level: Easy ju j u LO: 2 ju
4 Garrison, Managerial Accounting, 12th Edition
ju ju ju ju
, 9. A firm's organization chart will normally show both the formal and informal lines of
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reporting and communication.
ju ju ju
Answer: False Level: Easy ju j u ju LO: 2 ju
10. The Chief Financial Officer of an organization is responsible for ensuring that line
ju ju ju ju ju ju ju ju ju ju ju ju
operations run smoothly.
ju ju ju
Answer: False ju j u Level: Medium LO: 2 ju ju
11. Traditionally, companies have maintained large amounts of raw materials, work in
ju ju ju ju ju ju ju ju ju ju
process, and finished goods inventories to act as buffers so that operations can proceed
ju ju ju ju ju ju ju ju ju ju ju ju ju ju
smoothly even if there are unanticipated disruptions.
ju ju ju ju ju ju ju
Answer: True ju j u Level: Medium LO: 3 ju ju
12. Process Reengineering is generally considered to be a more radical approach to
ju ju ju ju ju ju ju ju ju ju ju
improvement than Total Quality Management.
ju ju ju ju ju
Answer: True ju j u Level: Easy ju j u LO: 3 ju
13. Process Reengineering emphasizes a team approach involving front-line workers,
ju ju ju ju ju ju ju ju
whereas Total Quality Management is usually implemented using outside specialists
ju ju ju ju ju ju ju ju ju ju
and is imposed from above.
ju ju ju ju ju
Answer: False ju j u Level: Medium LO: 3 ju ju
14. If ethical standards were not generally followed, one of the results would probably be
ju ju ju ju ju ju ju ju ju ju ju ju ju
fewer goods and services available in the marketplace.
ju ju ju ju ju ju ju ju
Answer: True ju j u Level: Medium LO: 4 ju ju
15. The Standards of Ethical Conduct for Management Accountants promulgated by
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the Institute of Management Accountants specifically state that management
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accountants' sole ethical responsibility is to not break any laws.
ju ju ju ju ju ju ju ju ju ju
Answer: False Level: Easy ju j u ju LO: 4 ju
Garrison, Managerial Accounting, 12th Edition
ju ju ju ju 5
, Chapter 1 u
j ju ju Managerial Accounting and the Business Environment ju u
j ju ju ju
Multiple Choice Questions
ju ju
16. Management accounting focuses primarily on providing data for: ju ju ju ju ju ju ju
A) internal uses by managers. ju ju ju
B) external uses by stockholders and creditors. ju ju ju ju ju
C) external uses by the Internal Revenue Service. ju ju ju ju ju ju
D) external uses by the Securities and Exchange Commission. ju ju ju ju ju ju ju
Answer: A ju j u Level: Easy LO: 1 ju ju
17. Managerial accounting: ju
A) is more future oriented than financial accounting.
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B) tends to summarize information more than financial accounting
ju ju ju ju ju ju ju
C) is primarily concerned with providing information to external users.
ju ju ju ju ju ju ju ju
D) is more concerned with precision than timeliness.
ju ju ju ju ju ju
Answer: A ju j u Level: Easy LO: 1 ju ju
18. Compared to financial accounting, managerial accounting places more emphasis on:
ju ju ju ju ju ju ju ju ju
A) the flexibility of information.
ju ju ju
B) the precision of information.
ju ju ju
C) the timeliness of information.
ju ju ju
D) both A and C above. ju ju ju ju
Answer: D ju j u Level: Easy LO: 1 ju ju
19. The function of management that compares planned results to actual results is known
ju ju ju ju ju ju ju ju ju ju ju ju
as:
ju
A) planning.
B) directing and motivating. ju ju
C) controlling.
D) decision making. ju
Answer: C ju j u Level: Easy LO: 2 ju ju
20. Which of the functions of management involves overseeing day-to-dayactivities?
ju ju ju ju ju ju ju ju
A) Planning
B) Directing and motivating ju ju
C) Controlling
D) Decision making ju
Answer: B ju j u Level: Easy LO: 2 ju ju
6 Garrison, Managerial Accounting, 12th Edition
ju ju ju ju
ju ju ju ju 3
, Chapter 1 u
j ju ju Managerial Accounting and the Business Environment ju u
j ju ju ju
True/False Questions
ju
1. Although financial and managerial accounting differ in many ways, they are similar
ju ju ju ju ju ju ju ju ju ju ju
in that both rely on the same underlying financial data.
ju ju ju ju ju ju ju ju ju ju
Answer: True ju j u Level: Medium LO: 1 ju ju
2. Managerial accounting is a branch of financial accounting and serves essentially the
ju ju ju ju ju ju ju ju ju ju ju
same purposes as financial accounting.
ju ju ju ju ju
Answer: False ju j u Level: Medium LO: 1 ju ju
3. Managerial accounting places greater emphasis on the future than financial
ju ju ju ju ju ju ju ju ju
accounting, which is primarily concerned with the past.
ju ju ju ju ju ju ju ju
Answer: True ju j u Level: Easy ju j u LO: 1 ju
4. Managerial accounting is not needed in a non-profit or governmental organization.
ju ju ju ju ju ju ju ju ju ju
Answer: False Level: Easy ju j u ju LO: 1 ju
5. When carrying out their planning activities, managers select a course of action and
ju ju ju ju ju ju ju ju ju ju ju ju
specify how the action will be implemented.
ju ju ju ju ju ju ju
Answer: True ju j u Level: Easy ju j u LO: 2 ju
6. When carrying out their planning activities, managers obtain feedback to ensure
ju ju ju ju ju ju ju ju ju ju
that the plan is actually carried out and is appropriately modified as circumstances
ju ju ju ju ju ju ju ju ju ju ju ju ju
change.
ju
Answer: False ju j u Level: Medium LO: 2 ju ju
7. The controller occupies a line position in an organization.
ju ju ju ju ju ju ju ju
Answer: False Level: Easy ju j u ju LO: 2 ju
8. Decentralization means the delegation of decision-making authority throughout ju ju ju ju ju ju ju
an organization by allowing managers at various operating levels to make key
ju ju ju ju ju ju ju ju ju ju ju ju
decisions relating to their own area of responsibility.
ju ju ju ju ju ju ju ju
Answer: True ju j u Level: Easy ju j u LO: 2 ju
4 Garrison, Managerial Accounting, 12th Edition
ju ju ju ju
, 9. A firm's organization chart will normally show both the formal and informal lines of
ju ju ju ju ju ju ju ju ju ju ju ju ju
reporting and communication.
ju ju ju
Answer: False Level: Easy ju j u ju LO: 2 ju
10. The Chief Financial Officer of an organization is responsible for ensuring that line
ju ju ju ju ju ju ju ju ju ju ju ju
operations run smoothly.
ju ju ju
Answer: False ju j u Level: Medium LO: 2 ju ju
11. Traditionally, companies have maintained large amounts of raw materials, work in
ju ju ju ju ju ju ju ju ju ju
process, and finished goods inventories to act as buffers so that operations can proceed
ju ju ju ju ju ju ju ju ju ju ju ju ju ju
smoothly even if there are unanticipated disruptions.
ju ju ju ju ju ju ju
Answer: True ju j u Level: Medium LO: 3 ju ju
12. Process Reengineering is generally considered to be a more radical approach to
ju ju ju ju ju ju ju ju ju ju ju
improvement than Total Quality Management.
ju ju ju ju ju
Answer: True ju j u Level: Easy ju j u LO: 3 ju
13. Process Reengineering emphasizes a team approach involving front-line workers,
ju ju ju ju ju ju ju ju
whereas Total Quality Management is usually implemented using outside specialists
ju ju ju ju ju ju ju ju ju ju
and is imposed from above.
ju ju ju ju ju
Answer: False ju j u Level: Medium LO: 3 ju ju
14. If ethical standards were not generally followed, one of the results would probably be
ju ju ju ju ju ju ju ju ju ju ju ju ju
fewer goods and services available in the marketplace.
ju ju ju ju ju ju ju ju
Answer: True ju j u Level: Medium LO: 4 ju ju
15. The Standards of Ethical Conduct for Management Accountants promulgated by
ju ju ju ju ju ju ju ju ju
the Institute of Management Accountants specifically state that management
ju ju ju ju ju ju ju ju ju
accountants' sole ethical responsibility is to not break any laws.
ju ju ju ju ju ju ju ju ju ju
Answer: False Level: Easy ju j u ju LO: 4 ju
Garrison, Managerial Accounting, 12th Edition
ju ju ju ju 5
, Chapter 1 u
j ju ju Managerial Accounting and the Business Environment ju u
j ju ju ju
Multiple Choice Questions
ju ju
16. Management accounting focuses primarily on providing data for: ju ju ju ju ju ju ju
A) internal uses by managers. ju ju ju
B) external uses by stockholders and creditors. ju ju ju ju ju
C) external uses by the Internal Revenue Service. ju ju ju ju ju ju
D) external uses by the Securities and Exchange Commission. ju ju ju ju ju ju ju
Answer: A ju j u Level: Easy LO: 1 ju ju
17. Managerial accounting: ju
A) is more future oriented than financial accounting.
ju ju ju ju ju ju
B) tends to summarize information more than financial accounting
ju ju ju ju ju ju ju
C) is primarily concerned with providing information to external users.
ju ju ju ju ju ju ju ju
D) is more concerned with precision than timeliness.
ju ju ju ju ju ju
Answer: A ju j u Level: Easy LO: 1 ju ju
18. Compared to financial accounting, managerial accounting places more emphasis on:
ju ju ju ju ju ju ju ju ju
A) the flexibility of information.
ju ju ju
B) the precision of information.
ju ju ju
C) the timeliness of information.
ju ju ju
D) both A and C above. ju ju ju ju
Answer: D ju j u Level: Easy LO: 1 ju ju
19. The function of management that compares planned results to actual results is known
ju ju ju ju ju ju ju ju ju ju ju ju
as:
ju
A) planning.
B) directing and motivating. ju ju
C) controlling.
D) decision making. ju
Answer: C ju j u Level: Easy LO: 2 ju ju
20. Which of the functions of management involves overseeing day-to-dayactivities?
ju ju ju ju ju ju ju ju
A) Planning
B) Directing and motivating ju ju
C) Controlling
D) Decision making ju
Answer: B ju j u Level: Easy LO: 2 ju ju
6 Garrison, Managerial Accounting, 12th Edition
ju ju ju ju
