TEST BANK :HORNGREN'S COST ACCOUNTING: A MANAGERIAL
EMPHASIS,CANADIAN EDITION, 10TH EDITION PUBLISHED BY
PEARSON CANADA (MARCH 15, 2024) © 2025
,Chapter 1: The Accountant's Vital Role in Decision Making
1. Which of the following is the primary role of accountants in decision-making?
a) To determine the cost of producing goods
b) To provide financial information for managers to make informed decisions
c) To ensure compliance with tax regulations
d) To design marketing strategies for companies
Correct Answer: b) To provide financial information for managers to make informed
decisions
Rationale: Accountants provide relevant financial data that assist managers in making
decisions about budgeting, planning, and controlling operations.
DIF: Easy
OBJ: Understand the role of accountants in decision-making
TOP: Accountant’s role
REF: Chapter 1
MSC: Remembering
2. Which of the following is NOT typically a decision-making activity supported by
management accounting?
a) Pricing products
b) Hiring new employees
c) Preparing tax returns
d) Budgeting for future expenses
Correct Answer: c) Preparing tax returns
Rationale: Management accountants focus on internal decision-making processes, such
as pricing, budgeting, and financial planning, not on preparing tax returns, which are part of
financial accounting.
DIF: Easy
OBJ: Understand the scope of management accounting
TOP: Management Accounting vs Financial Accounting
REF: Chapter 1
MSC: Understanding
3. Which of the following best describes the decision-making process in
managerial accounting?
a) A routine process focused on external financial reporting
, b) A process involving only the accounting team to allocate funds
c) A continuous process of evaluating options based on financial data
d) A fixed process that occurs annually
Correct Answer: c) A continuous process of evaluating options based on financial data
Rationale: Managerial accounting supports an ongoing process of analyzing financial data
to assist managers in making informed decisions.
DIF: Moderate
OBJ: Understand decision-making process in managerial accounting
TOP: Decision-making process
REF: Chapter 1
MSC: Understanding
4. Which of the following is a key difference between managerial accounting and
financial accounting?
a) Managerial accounting focuses on external reporting, while financial accounting
focuses on internal decisions.
b) Managerial accounting reports on the past, while financial accounting forecasts
future performance.
c) Managerial accounting provides detailed information for decision-making, while
financial accounting focuses on general-purpose financial reports.
d) Managerial accounting is mandatory, while financial accounting is optional.
Correct Answer: c) Managerial accounting provides detailed information for decision-
making, while financial accounting focuses on general-purpose financial reports.
Rationale: Managerial accounting is focused on helping internal decision-makers,
whereas financial accounting provides standardized reports for external users.
DIF: Moderate
OBJ: Distinguish between managerial and financial accounting
TOP: Management vs Financial Accounting
REF: Chapter 1
MSC: Analyzing
5. Which of the following activities would most likely require the involvement of a
management accountant?
a) Preparing the company's income tax return
b) Creating a financial statement for a shareholder meeting
c) Evaluating different production methods for a new product
d) Conducting a financial audit
, Correct Answer: c) Evaluating different production methods for a new product
Rationale: Management accountants provide insights for internal decision-making
processes, such as evaluating alternative production methods for profitability.
DIF: Easy
OBJ: Apply managerial accounting in decision-making
TOP: Application of Managerial Accounting
REF: Chapter 1
MSC: Applying
6. In the context of managerial decision-making, which of the following is
considered a qualitative factor?
a) The estimated cost of a new machine
b) The expected revenue from a new product line
c) The employee morale resulting from a new work schedule
d) The labor costs for a new project
Correct Answer: c) The employee morale resulting from a new work schedule
Rationale: Qualitative factors are non-numeric and relate to aspects like employee
satisfaction, customer satisfaction, and company reputation.
DIF: Moderate
OBJ: Recognize qualitative factors in decision-making
TOP: Qualitative vs Quantitative Factors
REF: Chapter 1
MSC: Applying
7. Which of the following is a practical example of an accountant’s role in short-
term decision making?
a) Creating a budget for the next fiscal year
b) Analyzing the cost-benefit of launching a new product in the market
c) Providing a report for a company’s annual general meeting
d) Reporting on tax liabilities for the current year
Correct Answer: b) Analyzing the cost-benefit of launching a new product in the market
Rationale: Short-term decision-making typically involves evaluating specific options, such
as new products, based on current financial data.
DIF: Moderate
OBJ: Understand short-term decision-making
TOP: Short-Term Decision Making
EMPHASIS,CANADIAN EDITION, 10TH EDITION PUBLISHED BY
PEARSON CANADA (MARCH 15, 2024) © 2025
,Chapter 1: The Accountant's Vital Role in Decision Making
1. Which of the following is the primary role of accountants in decision-making?
a) To determine the cost of producing goods
b) To provide financial information for managers to make informed decisions
c) To ensure compliance with tax regulations
d) To design marketing strategies for companies
Correct Answer: b) To provide financial information for managers to make informed
decisions
Rationale: Accountants provide relevant financial data that assist managers in making
decisions about budgeting, planning, and controlling operations.
DIF: Easy
OBJ: Understand the role of accountants in decision-making
TOP: Accountant’s role
REF: Chapter 1
MSC: Remembering
2. Which of the following is NOT typically a decision-making activity supported by
management accounting?
a) Pricing products
b) Hiring new employees
c) Preparing tax returns
d) Budgeting for future expenses
Correct Answer: c) Preparing tax returns
Rationale: Management accountants focus on internal decision-making processes, such
as pricing, budgeting, and financial planning, not on preparing tax returns, which are part of
financial accounting.
DIF: Easy
OBJ: Understand the scope of management accounting
TOP: Management Accounting vs Financial Accounting
REF: Chapter 1
MSC: Understanding
3. Which of the following best describes the decision-making process in
managerial accounting?
a) A routine process focused on external financial reporting
, b) A process involving only the accounting team to allocate funds
c) A continuous process of evaluating options based on financial data
d) A fixed process that occurs annually
Correct Answer: c) A continuous process of evaluating options based on financial data
Rationale: Managerial accounting supports an ongoing process of analyzing financial data
to assist managers in making informed decisions.
DIF: Moderate
OBJ: Understand decision-making process in managerial accounting
TOP: Decision-making process
REF: Chapter 1
MSC: Understanding
4. Which of the following is a key difference between managerial accounting and
financial accounting?
a) Managerial accounting focuses on external reporting, while financial accounting
focuses on internal decisions.
b) Managerial accounting reports on the past, while financial accounting forecasts
future performance.
c) Managerial accounting provides detailed information for decision-making, while
financial accounting focuses on general-purpose financial reports.
d) Managerial accounting is mandatory, while financial accounting is optional.
Correct Answer: c) Managerial accounting provides detailed information for decision-
making, while financial accounting focuses on general-purpose financial reports.
Rationale: Managerial accounting is focused on helping internal decision-makers,
whereas financial accounting provides standardized reports for external users.
DIF: Moderate
OBJ: Distinguish between managerial and financial accounting
TOP: Management vs Financial Accounting
REF: Chapter 1
MSC: Analyzing
5. Which of the following activities would most likely require the involvement of a
management accountant?
a) Preparing the company's income tax return
b) Creating a financial statement for a shareholder meeting
c) Evaluating different production methods for a new product
d) Conducting a financial audit
, Correct Answer: c) Evaluating different production methods for a new product
Rationale: Management accountants provide insights for internal decision-making
processes, such as evaluating alternative production methods for profitability.
DIF: Easy
OBJ: Apply managerial accounting in decision-making
TOP: Application of Managerial Accounting
REF: Chapter 1
MSC: Applying
6. In the context of managerial decision-making, which of the following is
considered a qualitative factor?
a) The estimated cost of a new machine
b) The expected revenue from a new product line
c) The employee morale resulting from a new work schedule
d) The labor costs for a new project
Correct Answer: c) The employee morale resulting from a new work schedule
Rationale: Qualitative factors are non-numeric and relate to aspects like employee
satisfaction, customer satisfaction, and company reputation.
DIF: Moderate
OBJ: Recognize qualitative factors in decision-making
TOP: Qualitative vs Quantitative Factors
REF: Chapter 1
MSC: Applying
7. Which of the following is a practical example of an accountant’s role in short-
term decision making?
a) Creating a budget for the next fiscal year
b) Analyzing the cost-benefit of launching a new product in the market
c) Providing a report for a company’s annual general meeting
d) Reporting on tax liabilities for the current year
Correct Answer: b) Analyzing the cost-benefit of launching a new product in the market
Rationale: Short-term decision-making typically involves evaluating specific options, such
as new products, based on current financial data.
DIF: Moderate
OBJ: Understand short-term decision-making
TOP: Short-Term Decision Making
