Managerial Accounting (4th Edition) – Charles
Davis & Elizabeth Davis – Complete Test Bank
,
,1-1 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 “The
Generation 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
Planning Provides 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
The Information 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 Costs
And Cost Variances Will Be More Useful To Managers Than Information About
Research And Development.
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
5. Discuss The Importance Of Ethical Behavior In Managerial Accounting
(Unit 1.3)
Ethical Behavior Means Knowing Right From Wrong And Then Doing The Right Thing.
Many Companies 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 To Ethical Behavior Can Lead To Superior Financial Performance.
Davis & Elizabeth Davis – Complete Test Bank
,
,1-1 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 “The
Generation 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
Planning Provides 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
The Information 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 Costs
And Cost Variances Will Be More Useful To Managers Than Information About
Research And Development.
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
5. Discuss The Importance Of Ethical Behavior In Managerial Accounting
(Unit 1.3)
Ethical Behavior Means Knowing Right From Wrong And Then Doing The Right Thing.
Many Companies 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 To Ethical Behavior Can Lead To Superior Financial Performance.
