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 accounting information for a company is primarily used by .
A) its customers to understand the pricing of the product
B) its creditors to understand the credibility of the business
C) its employees to plan, direct and control operations
D) its investors to make their investment decisions
Answer: C
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
10) Which dof dthe dfollowing dstatements dis dtrue dof dfinancial daccounting?
A) It dprovides dinformation dto dinvestors dneeded dfor dtheir dinvestment ddecisions.
B) It dprovides dfuture dfocused dinformation dneeded dfor dmanaging dand ddelegating doperations.
C) It dfocuses don ddetailed dreports dfor dparts dof dthe dcompany drather dthan dthe dwhole dcompany.
D) It dfocuses don dplanning, ddirecting dand dcontrolling dday-to-day
doperations.dAnswer: d A
Diff: d1
LO: d M:1-1
AACSB: d Application dof
dknowledgedAICPA dFunctional:
d Reporting
PE dQuestion dType: d Concept
H2: d Why dIs dManagerial dAccounting dImportant? d(H1)
11) Which dof dthe dfollowing dis dthe dprimary dfocus dof dmanagerial daccounting?
A) providing dinformation dthat dmanagers dneed dto dmake doperational ddecisions
B) providing dhistorical ddata dto dinvestors dand dcreditors
C) providing dsummarized dresults dof doperations
D) providing dinformation dto dcomply dwith dlaws dand dregulations dof dgovernment
dbodiesdAnswer: d A
Diff: d1
LO: d M:1-1
AACSB: d Application dof
dknowledgedAICPA dFunctional:
d Reporting
PE dQuestion dType: d Concept
H2: d Why dIs dManagerial dAccounting dImportant? d(H1)
12) Which dof dthe dfollowing dis dthe dprimary dfocus dof dfinancial daccounting?
A) providing dinformation dthat dmanagers dneed dto dmake doperational ddecisions
B) providing dsummarized dinformation don doperational dresults dto dinvestors dand dcreditors
C) providing dinformation dto dmanagers dto dassist din dplanning, ddirecting dand dcontrolling doperations
D) providing dhighly ddetailed dinformation don dproduct dlines, dregions, dand
ddivisionsdAnswer: d B
Diff: d1
LO: d M:1-1
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 accounting information for a company is primarily used by .
A) its customers to understand the pricing of the product
B) its creditors to understand the credibility of the business
C) its employees to plan, direct and control operations
D) its investors to make their investment decisions
Answer: C
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)
10) Which dof dthe dfollowing dstatements dis dtrue dof dfinancial daccounting?
A) It dprovides dinformation dto dinvestors dneeded dfor dtheir dinvestment ddecisions.
B) It dprovides dfuture dfocused dinformation dneeded dfor dmanaging dand ddelegating doperations.
C) It dfocuses don ddetailed dreports dfor dparts dof dthe dcompany drather dthan dthe dwhole dcompany.
D) It dfocuses don dplanning, ddirecting dand dcontrolling dday-to-day
doperations.dAnswer: d A
Diff: d1
LO: d M:1-1
AACSB: d Application dof
dknowledgedAICPA dFunctional:
d Reporting
PE dQuestion dType: d Concept
H2: d Why dIs dManagerial dAccounting dImportant? d(H1)
11) Which dof dthe dfollowing dis dthe dprimary dfocus dof dmanagerial daccounting?
A) providing dinformation dthat dmanagers dneed dto dmake doperational ddecisions
B) providing dhistorical ddata dto dinvestors dand dcreditors
C) providing dsummarized dresults dof doperations
D) providing dinformation dto dcomply dwith dlaws dand dregulations dof dgovernment
dbodiesdAnswer: d A
Diff: d1
LO: d M:1-1
AACSB: d Application dof
dknowledgedAICPA dFunctional:
d Reporting
PE dQuestion dType: d Concept
H2: d Why dIs dManagerial dAccounting dImportant? d(H1)
12) Which dof dthe dfollowing dis dthe dprimary dfocus dof dfinancial daccounting?
A) providing dinformation dthat dmanagers dneed dto dmake doperational ddecisions
B) providing dsummarized dinformation don doperational dresults dto dinvestors dand dcreditors
C) providing dinformation dto dmanagers dto dassist din dplanning, ddirecting dand dcontrolling doperations
D) providing dhighly ddetailed dinformation don dproduct dlines, dregions, dand
ddivisionsdAnswer: d B
Diff: d1
LO: d M:1-1
