1-1 Test Bank for Davis & Davis, Managerial Accounting, 4/e
TEST BANK vv
Managerial Accounting4th Edition
vv v vv
By Charles Davis Elizabeth Davis
vv vv vv vv Chapter 1 - 13
vv vv vv
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Table Of Contents
1. Accounting as a Tool for Management
2. Cost Behavior and Cost Estimation
3. Cost-Volume-Profit Analysis and Pricing Decisions
4. Product Costs and Job Order Costing
5. Planning and Forecasting
5A: Planning and Forecasting in a Retail Setting* (online only)
6. Performance Evaluation: Variance Analysis
7. Activity-Based Costing and Activity-Based Management
8. Using Accounting Information to Make Managerial Decisions
9. Capital Budgeting
10. Decentralization and Performance Evaluation
11. Performance Evaluation Revisited: A Balanced Approach
12. Financial Statement Analysis
13. Statement of Cash Flows
,1-3 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Chapter 1
Accounting as a Tool for Management
CHAPTER LEARNING OBJECTIVES
1. Define managerial accounting (Unit 1.1)
There are several formal definitions of managerial accounting. A simple one
is “thegeneration of relevant information to support management’s decision-
making activities.”
2. Describe the differences between managerial and financial
accounting(Unit 1.1)
Managerial accounting’s primary users are managers and decision makers within
an organization, whereas financial accounting is aimed primarily at external
users. Unlike GAAP that guides financial accounting, there are no mandated
rules in managerial accounting. Managerial accounting reports focus on
operating segments, while financial accounting statements report results for the
organization as a whole. Managerial accounting is concerned more with
projecting future results than reporting past results. Managerial information is
prepared to take advantage of a window of opportunity, even if some accuracy
must be sacrificed. Financial accounting information is balanced to the penny
and is delivered after the end of the accounting period.
3. List and describe the four functions of managers (Unit 1.1)
Planning means setting a direction for the organization. Long-term, or strategic
planningprovides direction for a five- to ten-year period. Short-term or
operational planning provides more detailed guidance for the coming year; it
translates the company’s strategy into action steps. Controlling is the monitoring
of day-to-day operations to identify any problems that require corrective action.
Evaluating is the process of comparing a particular period’s actual results to
planned results, for the purpose of assessing managerial performance. Decision
making means choosing between alternative courses of action.
4. Explain how the selection of a particular business strategy
determines theinformation that managers need to run an
organization effectively (Unit 1.2)
To run a business effectively, managers need information that shows how
well operations are meeting the organization’s strategic goals. For instance, if
the organization’s strategy is to be a low-cost producer, information about
product costsand cost variances will be more useful to managers than
information about researchand development.
, 1-4 Test Bank for Davis & Davis, Managerial Accounting, 4/e
5. Discuss the importance of ethical behavior in managerial
accounting (Unit1.3)
Ethical behavior means knowing right from wrong and then doing the right thing.
Manycompanies and most professional organizations have codes of conduct to
guide employees’ actions. Acting unethically can lead to illegal activity and
ultimately to the destruction of the firm. Furthermore, research has shown that a
public commitment toethical behavior can lead to superior financial
performance.
TEST BANK vv
Managerial Accounting4th Edition
vv v vv
By Charles Davis Elizabeth Davis
vv vv vv vv Chapter 1 - 13
vv vv vv
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Table Of Contents
1. Accounting as a Tool for Management
2. Cost Behavior and Cost Estimation
3. Cost-Volume-Profit Analysis and Pricing Decisions
4. Product Costs and Job Order Costing
5. Planning and Forecasting
5A: Planning and Forecasting in a Retail Setting* (online only)
6. Performance Evaluation: Variance Analysis
7. Activity-Based Costing and Activity-Based Management
8. Using Accounting Information to Make Managerial Decisions
9. Capital Budgeting
10. Decentralization and Performance Evaluation
11. Performance Evaluation Revisited: A Balanced Approach
12. Financial Statement Analysis
13. Statement of Cash Flows
,1-3 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Chapter 1
Accounting as a Tool for Management
CHAPTER LEARNING OBJECTIVES
1. Define managerial accounting (Unit 1.1)
There are several formal definitions of managerial accounting. A simple one
is “thegeneration of relevant information to support management’s decision-
making activities.”
2. Describe the differences between managerial and financial
accounting(Unit 1.1)
Managerial accounting’s primary users are managers and decision makers within
an organization, whereas financial accounting is aimed primarily at external
users. Unlike GAAP that guides financial accounting, there are no mandated
rules in managerial accounting. Managerial accounting reports focus on
operating segments, while financial accounting statements report results for the
organization as a whole. Managerial accounting is concerned more with
projecting future results than reporting past results. Managerial information is
prepared to take advantage of a window of opportunity, even if some accuracy
must be sacrificed. Financial accounting information is balanced to the penny
and is delivered after the end of the accounting period.
3. List and describe the four functions of managers (Unit 1.1)
Planning means setting a direction for the organization. Long-term, or strategic
planningprovides direction for a five- to ten-year period. Short-term or
operational planning provides more detailed guidance for the coming year; it
translates the company’s strategy into action steps. Controlling is the monitoring
of day-to-day operations to identify any problems that require corrective action.
Evaluating is the process of comparing a particular period’s actual results to
planned results, for the purpose of assessing managerial performance. Decision
making means choosing between alternative courses of action.
4. Explain how the selection of a particular business strategy
determines theinformation that managers need to run an
organization effectively (Unit 1.2)
To run a business effectively, managers need information that shows how
well operations are meeting the organization’s strategic goals. For instance, if
the organization’s strategy is to be a low-cost producer, information about
product costsand cost variances will be more useful to managers than
information about researchand development.
, 1-4 Test Bank for Davis & Davis, Managerial Accounting, 4/e
5. Discuss the importance of ethical behavior in managerial
accounting (Unit1.3)
Ethical behavior means knowing right from wrong and then doing the right thing.
Manycompanies and most professional organizations have codes of conduct to
guide employees’ actions. Acting unethically can lead to illegal activity and
ultimately to the destruction of the firm. Furthermore, research has shown that a
public commitment toethical behavior can lead to superior financial
performance.
