Test Bank for Financial and Managerial Accounting: Managerial Chapters, 7th Edition (Miller-Nobles)

Test Bank for
Financial and Managerial Accounting: Managerial Chapters, 7e (Miller-Nobles)

Test Bank for All Managerial Chapters
Table Of Contents
Chapter M:1 Introduction to Managerial Accounting
Chapter M:2 Job Order Costing
Chapter M:3 Process Costing
Chapter M:4 Lean Management Systems: Activity-Based, Just-In-Time, and Quality
Management Systems
Chapter M:5 Cost-Volume-Profit Analysis
Chapter M:6 Variable Costing
Chapter M:7 Master Budgets
Chapter M:8 Flexible Budgets and Standard Cost Systems
Chapter M:9 Responsibility Accounting and Performance Evaluation
Chapter M:10 Short-Term Business Decisions
Chapter M:11 Capital Investment Decisions



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

1
Copyright © 2021 Pearson Education, Inc.

,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

2
Copyright © 2021 Pearson Education, Inc.

,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 of the following statements is true of financial accounting?
A) It provides information to investors needed for their investment decisions.
B) It provides future focused information needed for managing and delegating operations.
C) It focuses on detailed reports for parts of the company rather than the whole company.
D) It focuses on planning, directing and controlling day-to-day operations.
Answer: A
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

11) Which of the following is the primary focus of managerial accounting?
A) providing information that managers need to make operational decisions
B) providing historical data to investors and creditors
C) providing summarized results of operations
D) providing information to comply with laws and regulations of government bodies
Answer: A
Diff: 1

3
Copyright © 2021 Pearson Education, Inc.

, LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

12) Which of the following is the primary focus of financial accounting?
A) providing information that managers need to make operational decisions
B) providing summarized information on operational results to investors and creditors
C) providing information to managers to assist in planning, directing and controlling operations
D) providing highly detailed information on product lines, regions, and divisions
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)

13) Connie is analyzing the financial statements of MegaMart and Bullseye Company. She wants to
invest in one of the companies and is trying to decide which company has the better past performance.
Connie is examining ________.
A) managerial accounting information
B) financial accounting information
C) regulatory accounting information
D) organizational accounting information
Answer: B
Explanation: Financial accounting information is focused on external users and past performance.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

14) Who is a primary user of managerial accounting information?
A) investors
B) company managers
C) creditors
D) government authorities
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)

15) Which of the following statements is true of managerial accounting?
A) It is required to follow GAAP.
B) The focus is on the future.
4
Copyright © 2021 Pearson Education, Inc.