TEST BANK
Financial and Managerial Accounting:
Managerial Chapters, 7th Edition
(Miller-Nobles) Chapter 1-11
,Chapter M:1 Introduction to Managerial Accounting
Learning Objective M:1-1
1) Managerial accounting focuses on providing information for internal planning and control.
Answer: TRUE
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provides
information to external stakeholders.
Answer: FALSE
Explanation: The reverse is true. Financial accounting serves external stakeholder information needs while
managerial accounting serves the needs of managers and internal staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
3) Financial statements prepared for investors and creditors often include forward-looking information
because they make decisions based on a company's future prospects.
Answer: FALSE
Explanation: Financial statements provide mostly historical information; relevant and faithfully
representative information and focused on the past.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
4) Managerial accounting reporting by a public firm is required to follow the rules of GAAP.
Answer: FALSE
Explanation: Managerial accounting information is not guided by GAAP but rather by the concept of
usefulness to management for decision making purposes.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
,H2: Why Is Managerial Accounting Important? (H1)
5) Financial reporting is typically much more detailed than managerial accounting.
Answer: FALSE
Explanation: Financial reporting is typically less detailed than managerial accounting information.
Financial accounting reporting is usually summary reports, prepared primarily on the company as a
whole, usually on a quarterly or annual basis.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
6) Managerial accounting provides financial statements that report results of operations, financial
position, and cash flows both to managers and to external stockholders.
Answer: FALSE
Explanation: Managerial accounting provides the information needed to plan and control operations and
therefore serves the information needs of internal parties such as managers and staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
7) Which of the following is a focus of managerial accounting?
A) to generate a company's financial statements for tax reporting
B) to provide information to business managers to assist them in controlling their businesses
C) to provide information to shareholders to assist them with their investment decisions
D) to ensure that the reports produced for internal and external business purposes are GAAP compliant
Answer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
8) Which of the following statements is true of managerial accounting?
A) The external stakeholders of a company are the primary users of managerial accounting.
B) Managerial accounting information is used to help managers plan, direct and control their operations.
C) An external audit by an independent CPA is required for managerial accounting information.
D) Managerial accounting information must comply with Generally Accepted Accounting Principles.
Answer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
, PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
9) Managerial iaccounting iinformation ifor ia icompany iis iprimarily iused iby .
A) its icustomers ito iunderstand ithe ipricing iof ithe iproduct
B) its icreditors ito iunderstand ithe icredibility iof ithe ibusiness
C) its iemployees ito iplan, idirect iand icontrol ioperations
D) its iinvestors ito imake itheir iinvestment
idecisionsiAnswer: i C
Diff: i1
LO: i M:1-1
AACSB: i Application iof
iknowledgeiAICPA iFunctional:
i Reporting
PE iQuestion iType: i Concept
H2: i Why iIs iManagerial iAccounting iImportant? i(H1)
10) Which iof ithe ifollowing istatements iis itrue iof ifinancial iaccounting?
A) It iprovides iinformation ito iinvestors ineeded ifor itheir iinvestment idecisions.
B) It iprovides ifuture ifocused iinformation ineeded ifor imanaging iand idelegating ioperations.
C) It ifocuses ion idetailed ireports ifor iparts iof ithe icompany irather ithan ithe iwhole icompany.
D) It ifocuses ion iplanning, idirecting iand icontrolling iday-to-day
ioperations.iAnswer: i A
Diff: i1
LO: i M:1-1
AACSB: i Application iof
iknowledgeiAICPA iFunctional:
i Reporting
PE iQuestion iType: i Concept
H2: i Why iIs iManagerial iAccounting iImportant? i(H1)
11) Which iof ithe ifollowing iis ithe iprimary ifocus iof imanagerial iaccounting?
A) providing iinformation ithat imanagers ineed ito imake ioperational idecisions
B) providing ihistorical idata ito iinvestors iand icreditors
C) providing isummarized iresults iof ioperations
D) providing iinformation ito icomply iwith ilaws iand iregulations iof igovernment
ibodiesiAnswer: i A
Diff: i1
LO: i M:1-1
AACSB: i Application iof
iknowledgeiAICPA iFunctional:
i Reporting
PE iQuestion iType: i Concept
H2: i Why iIs iManagerial iAccounting iImportant? i(H1)
12) Which iof ithe ifollowing iis ithe iprimary ifocus iof ifinancial iaccounting?
A) providing iinformation ithat imanagers ineed ito imake ioperational idecisions
B) providing isummarized iinformation ion ioperational iresults ito iinvestors iand icreditors
C) providing iinformation ito imanagers ito iassist iin iplanning, idirecting iand icontrolling ioperations
D) providing ihighly idetailed iinformation ion iproduct ilines, iregions, iand
idivisionsiAnswer: i B
Diff: i1
Financial and Managerial Accounting:
Managerial Chapters, 7th Edition
(Miller-Nobles) Chapter 1-11
,Chapter M:1 Introduction to Managerial Accounting
Learning Objective M:1-1
1) Managerial accounting focuses on providing information for internal planning and control.
Answer: TRUE
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provides
information to external stakeholders.
Answer: FALSE
Explanation: The reverse is true. Financial accounting serves external stakeholder information needs while
managerial accounting serves the needs of managers and internal staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
3) Financial statements prepared for investors and creditors often include forward-looking information
because they make decisions based on a company's future prospects.
Answer: FALSE
Explanation: Financial statements provide mostly historical information; relevant and faithfully
representative information and focused on the past.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
4) Managerial accounting reporting by a public firm is required to follow the rules of GAAP.
Answer: FALSE
Explanation: Managerial accounting information is not guided by GAAP but rather by the concept of
usefulness to management for decision making purposes.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
,H2: Why Is Managerial Accounting Important? (H1)
5) Financial reporting is typically much more detailed than managerial accounting.
Answer: FALSE
Explanation: Financial reporting is typically less detailed than managerial accounting information.
Financial accounting reporting is usually summary reports, prepared primarily on the company as a
whole, usually on a quarterly or annual basis.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
6) Managerial accounting provides financial statements that report results of operations, financial
position, and cash flows both to managers and to external stockholders.
Answer: FALSE
Explanation: Managerial accounting provides the information needed to plan and control operations and
therefore serves the information needs of internal parties such as managers and staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
7) Which of the following is a focus of managerial accounting?
A) to generate a company's financial statements for tax reporting
B) to provide information to business managers to assist them in controlling their businesses
C) to provide information to shareholders to assist them with their investment decisions
D) to ensure that the reports produced for internal and external business purposes are GAAP compliant
Answer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
8) Which of the following statements is true of managerial accounting?
A) The external stakeholders of a company are the primary users of managerial accounting.
B) Managerial accounting information is used to help managers plan, direct and control their operations.
C) An external audit by an independent CPA is required for managerial accounting information.
D) Managerial accounting information must comply with Generally Accepted Accounting Principles.
Answer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
, PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
9) Managerial iaccounting iinformation ifor ia icompany iis iprimarily iused iby .
A) its icustomers ito iunderstand ithe ipricing iof ithe iproduct
B) its icreditors ito iunderstand ithe icredibility iof ithe ibusiness
C) its iemployees ito iplan, idirect iand icontrol ioperations
D) its iinvestors ito imake itheir iinvestment
idecisionsiAnswer: i C
Diff: i1
LO: i M:1-1
AACSB: i Application iof
iknowledgeiAICPA iFunctional:
i Reporting
PE iQuestion iType: i Concept
H2: i Why iIs iManagerial iAccounting iImportant? i(H1)
10) Which iof ithe ifollowing istatements iis itrue iof ifinancial iaccounting?
A) It iprovides iinformation ito iinvestors ineeded ifor itheir iinvestment idecisions.
B) It iprovides ifuture ifocused iinformation ineeded ifor imanaging iand idelegating ioperations.
C) It ifocuses ion idetailed ireports ifor iparts iof ithe icompany irather ithan ithe iwhole icompany.
D) It ifocuses ion iplanning, idirecting iand icontrolling iday-to-day
ioperations.iAnswer: i A
Diff: i1
LO: i M:1-1
AACSB: i Application iof
iknowledgeiAICPA iFunctional:
i Reporting
PE iQuestion iType: i Concept
H2: i Why iIs iManagerial iAccounting iImportant? i(H1)
11) Which iof ithe ifollowing iis ithe iprimary ifocus iof imanagerial iaccounting?
A) providing iinformation ithat imanagers ineed ito imake ioperational idecisions
B) providing ihistorical idata ito iinvestors iand icreditors
C) providing isummarized iresults iof ioperations
D) providing iinformation ito icomply iwith ilaws iand iregulations iof igovernment
ibodiesiAnswer: i A
Diff: i1
LO: i M:1-1
AACSB: i Application iof
iknowledgeiAICPA iFunctional:
i Reporting
PE iQuestion iType: i Concept
H2: i Why iIs iManagerial iAccounting iImportant? i(H1)
12) Which iof ithe ifollowing iis ithe iprimary ifocus iof ifinancial iaccounting?
A) providing iinformation ithat imanagers ineed ito imake ioperational idecisions
B) providing isummarized iinformation ion ioperational iresults ito iinvestors iand icreditors
C) providing iinformation ito imanagers ito iassist iin iplanning, idirecting iand icontrolling ioperations
D) providing ihighly idetailed iinformation ion iproduct ilines, iregions, iand
idivisionsiAnswer: i B
Diff: i1
