Financial and Managerial Accounting: Managerial Chapters, 7th Edition Author: Tracie Miller-Nobles

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 needswhile
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.
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Answer: FALSE q



Explanation: Managerial accounting information is not guided by GAAP but rather by the concept of
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usefulness to management for decision making purposes.
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Diff: 1q



LO: M:1-1
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AACSB: Application of knowledge
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AICPA 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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5) Financial reporting is typically much more detailed than managerial accounting.
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Answer: FALSE q



Explanation: Financial reporting is typically less detailed than managerial accounting
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information. Financial accounting reporting is usually summary reports, prepared primarily on
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qthe company as a whole, usually on a quarterly or annual basis.
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Diff: 1 q



LO: M:1-1
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AACSB: Application of knowledge
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AICPA 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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6) Managerial accounting provides financial statements that report results of operations, financial
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position, and cash flows both to managers and to external stockholders.
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Answer: FALSE q q



Explanation: Managerial accounting provides the information needed to plan and control operations and
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therefore serves the information needs of internal parties such as managers and staff.
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Diff: 1 q



LO: M:1-1
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AACSB: Application of knowledge
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AICPA 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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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
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C) to provide information to shareholders to assist them with their investment decisions
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D) to ensure that the reports produced for internal and external business purposes are GAAP compliant
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Answer: B q



Diff: 1 q



LO: M:1-1
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AACSB: Application of knowledge
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AICPA 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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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.
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Answer: B q


Diff: 1 q



LO: M:1-1
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AACSB: Application of knowledge
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AICPA 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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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
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Diff: 1 q



LO: M:1-1
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AACSB: Application of knowledge
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AICPA 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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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-day operations.
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Answer: A
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Diff: 1 q



LO: M:1-1
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AACSB: Application of knowledge
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AICPA Functional: Reporting
q q


PE Question Type: Concept
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H2: Why Is Managerial Accounting Important? (H1)
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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 q q q q



D) providing information to comply with laws and regulations of government bodies
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Answer: A q



Diff: 1 q



LO: M:1-1
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AACSB: Application of knowledge
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AICPA Functional: Reporting
q q


PE Question Type: Concept
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H2: Why Is Managerial Accounting Important? (H1)
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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 divisions
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Answer: B q



Diff: 1 q



LO: M:1-1
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AACSB: Application of knowledge
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