,Chapter M:1 YJ Introduction to Managerial Accounting YJ YJ YJ
Learning Objective M:1-1 YJ YJ
1) Managerial accounting focuses on providing information for internal planning and control.A
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nswer: TRUE YJ
Diff: 1 YJ
LO: M:1-1 Y J
AACSB: Application of knowledgeAI
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CPA Functional: Reporting
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PE Question Type: Concept
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H2: Why Is Managerial Accounting Important? (H1)
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2) Financial accounting prepares reports for internal purposes, whereas managerial accounting providesin
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formation to external stakeholders.YJ YJ YJ
Answer: FALSE Y J
Explanation: The reverse is true. Financial accounting serves external stakeholder information needswhile
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managerial accounting serves the needs of managers and internal staff.
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Diff: 1 YJ
LO: M:1-1 Y J
AACSB: Application of knowledgeAI
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CPA Functional: Reporting
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PE Question Type: Concept
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H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
3) Financial statements prepared for investors and creditors often include forward-
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looking informationbecause they make decisions based on a company's future prospects.
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Answer: FALSE Y J
Explanation: Financial statements provide mostly historical information; relevant and faithfullyrepresentative
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information and focused on the past.
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Diff: 1 YJ
LO: M:1-1 Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
4) Managerial accounting reporting by a public firm is required to follow the rules of GAAP.A
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nswer: FALSE YJ
Explanation: Managerial accounting information is not guided by GAAP but rather by the concept ofusef
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ulness to management for decision making purposes.
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Diff: 1 YJ
LO: M:1-1 Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
,H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
5) Financial reporting is typically much more detailed than managerial accounting.A
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nswer: FALSE YJ
Explanation: Financial reporting is typically less detailed than managerial accounting information. Fin
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ancial accounting reporting is usually summary reports, prepared primarily on the company as awhol
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e, usually on a quarterly or annual basis.
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Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
6) Managerial accounting provides financial statements that report results of operations, financialp
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osition, and cash flows both to managers and to external stockholders.
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Answer: FALSE Y J
Explanation: Managerial accounting provides the information needed to plan and control operations andt
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herefore serves the information needs of internal parties such as managers and staff.
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
7) Which of the following is a focus of managerial accounting?
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A) to generate a company's financial statements for tax reporting
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B) to provide information to business managers to assist them in controlling their businesses
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
C) to provide information to shareholders to assist them with their investment decisions
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
D) to ensure that the reports produced for internal and external business purposes are GAAP compliantA
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nswer: B YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
8) Which of the following statements is true of managerial accounting?
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A) The external stakeholders of a company are the primary users of managerial accounting.
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B) Managerial accounting information is used to help managers plan, direct and control their operations.
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C) An external audit by an independent CPA is required for managerial accounting information.
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D) Managerial accounting information must comply with Generally Accepted Accounting Principles.An
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swer: B YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
, PE Question Type: Concept
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H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
9) Managerial accounting information for a company is primarily used by
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A) its customers to understand the pricing of the product
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B) its creditors to understand the credibility of the business
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C) its employees to plan, direct and control operations
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D) its investors to make their investment decisions
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Answer: C YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
10) Which of the following statements is true of financial accounting?
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A) It provides information to investors needed for their investment decisions.
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B) It provides future focused information needed for managing and delegating operations.
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C) It focuses on detailed reports for parts of the company rather than the whole company.
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D) It focuses on planning, directing and controlling day-to-
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day operations.Answer: A
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Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
11) Which of the following is the primary focus of managerial accounting?
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A) providing information that managers need to make operational decisions
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B) providing historical data to investors and creditors
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C) providing summarized results of operations YJ YJ YJ YJ
D) providing information to comply with laws and regulations of government bodiesA
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nswer: A YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
12) Which of the following is the primary focus of financial accounting?
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A) providing information that managers need to make operational decisions
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B) providing summarized information on operational results to investors and creditors
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C) providing information to managers to assist in planning, directing and controlling operations
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D) providing highly detailed information on product lines, regions, and divisionsA
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nswer: B YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledge
Y J YJ YJ
Learning Objective M:1-1 YJ YJ
1) Managerial accounting focuses on providing information for internal planning and control.A
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
nswer: TRUE YJ
Diff: 1 YJ
LO: M:1-1 Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
2) Financial accounting prepares reports for internal purposes, whereas managerial accounting providesin
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
formation to external stakeholders.YJ YJ YJ
Answer: FALSE Y J
Explanation: The reverse is true. Financial accounting serves external stakeholder information needswhile
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ JY YJ
managerial accounting serves the needs of managers and internal staff.
YJ YJ YJ YJ YJ YJ YJ YJ YJ
Diff: 1 YJ
LO: M:1-1 Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
3) Financial statements prepared for investors and creditors often include forward-
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looking informationbecause they make decisions based on a company's future prospects.
YJ JY YJ YJ YJ YJ YJ YJ YJ YJ YJ
Answer: FALSE Y J
Explanation: Financial statements provide mostly historical information; relevant and faithfullyrepresentative
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information and focused on the past.
YJ YJ YJ YJ YJ YJ
Diff: 1 YJ
LO: M:1-1 Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
4) Managerial accounting reporting by a public firm is required to follow the rules of GAAP.A
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
nswer: FALSE YJ
Explanation: Managerial accounting information is not guided by GAAP but rather by the concept ofusef
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
ulness to management for decision making purposes.
YJ YJ YJ YJ YJ YJ
Diff: 1 YJ
LO: M:1-1 Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
,H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
5) Financial reporting is typically much more detailed than managerial accounting.A
YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
nswer: FALSE YJ
Explanation: Financial reporting is typically less detailed than managerial accounting information. Fin
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
ancial accounting reporting is usually summary reports, prepared primarily on the company as awhol
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
e, usually on a quarterly or annual basis.
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Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
6) Managerial accounting provides financial statements that report results of operations, financialp
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
osition, and cash flows both to managers and to external stockholders.
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
Answer: FALSE Y J
Explanation: Managerial accounting provides the information needed to plan and control operations andt
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
herefore serves the information needs of internal parties such as managers and staff.
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
7) Which of the following is a focus of managerial accounting?
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A) to generate a company's financial statements for tax reporting
YJ YJ YJ YJ YJ YJ YJ YJ
B) to provide information to business managers to assist them in controlling their businesses
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
C) to provide information to shareholders to assist them with their investment decisions
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
D) to ensure that the reports produced for internal and external business purposes are GAAP compliantA
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nswer: B YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
8) Which of the following statements is true of managerial accounting?
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A) The external stakeholders of a company are the primary users of managerial accounting.
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B) Managerial accounting information is used to help managers plan, direct and control their operations.
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C) An external audit by an independent CPA is required for managerial accounting information.
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
D) Managerial accounting information must comply with Generally Accepted Accounting Principles.An
YJ YJ YJ YJ YJ YJ YJ YJ YJ JY
swer: B YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
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, PE Question Type: Concept
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H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
9) Managerial accounting information for a company is primarily used by
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A) its customers to understand the pricing of the product
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B) its creditors to understand the credibility of the business
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C) its employees to plan, direct and control operations
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D) its investors to make their investment decisions
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Answer: C YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
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CPA Functional: Reporting
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PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
10) Which of the following statements is true of financial accounting?
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A) It provides information to investors needed for their investment decisions.
YJ YJ YJ YJ YJ YJ YJ YJ YJ
B) It provides future focused information needed for managing and delegating operations.
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
C) It focuses on detailed reports for parts of the company rather than the whole company.
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
D) It focuses on planning, directing and controlling day-to-
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day operations.Answer: A
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Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
11) Which of the following is the primary focus of managerial accounting?
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A) providing information that managers need to make operational decisions
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B) providing historical data to investors and creditors
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C) providing summarized results of operations YJ YJ YJ YJ
D) providing information to comply with laws and regulations of government bodiesA
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nswer: A YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledgeAI
YJ YJ YJ JY
CPA Functional: Reporting
YJ YJ
PE Question Type: Concept
YJ YJ Y J
H2: Why Is Managerial Accounting Important? (H1)
Y J YJ YJ YJ YJ YJ
12) Which of the following is the primary focus of financial accounting?
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A) providing information that managers need to make operational decisions
YJ YJ YJ YJ YJ YJ YJ YJ
B) providing summarized information on operational results to investors and creditors
YJ YJ YJ YJ YJ YJ YJ YJ YJ
C) providing information to managers to assist in planning, directing and controlling operations
YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ YJ
D) providing highly detailed information on product lines, regions, and divisionsA
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nswer: B YJ
Diff: 1 YJ
LO: M:1-1
Y J
AACSB: Application of knowledge
Y J YJ YJ
