Garrison, fManagerial fAccounting, f12th fEdition 3
, Chapter 1 Managerial Accounting and the Business Environment
f f f f f f f
True/False Questions
f
1. Although financial and managerial accounting differ in many ways, they are similar in
f f f f f f f f f f f f
that both rely on the same underlying financial data.
f f f f f f f f f
Answer: True Level: Medium f f f f LO: 1 f
2. Managerial accounting is a branch of financial accounting and serves essentially the
f f f f f f f f f f f
same purposes as financial accounting.
f f f f f
Answer: False Level: Medium f f f f LO: 1 f
3. Managerial accounting places greater emphasis on the future than financial
f f f f f f f f f
accounting, which is primarily concerned with the past.
f f f f f f f f
Answer: True Level: Easy LO: 1 f f f fff f
4. Managerial accounting is not needed in a non-profit or governmental organization.
f f f f f f f f f f
Answer: False Level: Easy f ff f f LO: 1 f
5. When carrying out their planning activities, managers select a course of action and
f f f f f f f f f f f f
specify how the action will be implemented.
f f f f f f f
Answer: True Level: Easy LO: 2 f f f fff f
6. When carrying out their planning activities, managers obtain feedback to ensure that
f f f f f f f f f f f
the plan is actually carried out and is appropriately modified as circumstances change.
f f f f f f f f f f f f f
Answer: False Level: Medium f f f f LO: 2 f
7. The controller occupies a line position in an organization.
f f f f f f f f
Answer: False Level: Easy f ff f f LO: 2 f
8. Decentralization means the delegation of decision-making authority throughout an f f f f f f f f
organization by allowing managers at various operating levels to make key decisions
f f f f f f f f f f f f
relating to their own area of responsibility.
f f f f f f f
Answer: True Level: Easy LO: 2 f f f fff f
4 Garrison, fManagerial fAccounting, f12th fEdition
, 9. A firm's organization chart will normally show both the formal and informal lines of
f f f f f f f f f f f f f
reporting and communication.
f f f
Answer: False Level: Easy f ff f f LO: 2 f
10. The Chief Financial Officer of an organization is responsible for ensuring that line
f f f f f f f f f f f f
operations run smoothly.
f f f
Answer: False Level: Medium f f f f LO: 2 f
11. Traditionally, companies have maintained large amounts of raw materials, work in
f f f f f f f f f f
process, and finished goods inventories to act as buffers so that operations can proceed
f f f f f f f f f f f f f f
smoothly even if there are unanticipated disruptions.
f f f f f f f
Answer: True Level: Medium f f f f LO: 3 f
12. Process Reengineering is generally considered to be a more radical approach to
f f f f f f f f f f f
improvement than Total Quality Management.
f f f f f
Answer: True Level: Easy LO: 3
f f f fff f
13. Process Reengineering emphasizes a team approach involving front-line workers,
f f f f f f f f
whereas Total Quality Management is usually implemented using outside specialists
f f f f f f f f f f
and is imposed from above.
f f f f f
Answer: False Level: Medium f f f f LO: 3 f
14. If ethical standards were not generally followed, one of the results would probably be
f f f f f f f f f f f f f
fewer goods and services available in the marketplace.
f f f f f f f f
Answer: True Level: Medium f f f f LO: 4 f
15. The Standards of Ethical Conduct for Management Accountants promulgated by the
f f f f f f f f f f
Institute of Management Accountants specifically state that management accountants'
f f f f f f f f f
sole ethical responsibility is to not break any laws.
f f f f f f f f f
Answer: False Level: Easy f ff f f LO: 4 f
Garrison, fManagerial fAccounting, f12th fEdition 5
, Chapter 1 Managerial Accounting and the Business Environment
f f f f f f f
Multiple Choice Questions
f f
16. Management accounting focuses primarily on providing data for: f f f f f f f
A) internal uses by managers. f f f
B) external uses by stockholders and creditors. f f f f f
C) external uses by the Internal Revenue Service. f f f f f f
D) external uses by the Securities and Exchange Commission.
f f f f f f f
Answer: A Level: Easy f f f f LO: 1 f
17. Managerial accounting: f
A) is more future oriented than financial accounting.
f f f f f f
B) tends to summarize information more than financial accounting
f f f f f f f
C) is primarily concerned with providing information to external users.
f f f f f f f f
D) is more concerned with precision than timeliness.
f f f f f f
Answer: A Level: Easy f f f f LO: 1 f
18. Compared to financial accounting, managerial accounting places more emphasis on:
f f f f f f f f f
A) the flexibility of information.
f f f
B) the precision of information.
f f f
C) the timeliness of information.
f f f
D) both A and C above. f f f f
Answer: D Level: Easy f f f f LO: 1 f
19. The function of management that compares planned results to actual results is known
f f f f f f f f f f f f
as:
f
A) planning.
B) directing and motivating. f f
C) controlling.
D) decision making. f
Answer: C Level: Easy f f f f LO: 2 f
20. Which of the functions of management involves overseeing day-to-day activities?
f f f f f f f f f
A) Planning
B) Directing and motivating f f
C) Controlling
D) Decision making f
Answer: B Level: Easy f f f f LO: 2 f
6 Garrison, fManagerial fAccounting, f12th fEdition
, Chapter 1 Managerial Accounting and the Business Environment
f f f f f f f
True/False Questions
f
1. Although financial and managerial accounting differ in many ways, they are similar in
f f f f f f f f f f f f
that both rely on the same underlying financial data.
f f f f f f f f f
Answer: True Level: Medium f f f f LO: 1 f
2. Managerial accounting is a branch of financial accounting and serves essentially the
f f f f f f f f f f f
same purposes as financial accounting.
f f f f f
Answer: False Level: Medium f f f f LO: 1 f
3. Managerial accounting places greater emphasis on the future than financial
f f f f f f f f f
accounting, which is primarily concerned with the past.
f f f f f f f f
Answer: True Level: Easy LO: 1 f f f fff f
4. Managerial accounting is not needed in a non-profit or governmental organization.
f f f f f f f f f f
Answer: False Level: Easy f ff f f LO: 1 f
5. When carrying out their planning activities, managers select a course of action and
f f f f f f f f f f f f
specify how the action will be implemented.
f f f f f f f
Answer: True Level: Easy LO: 2 f f f fff f
6. When carrying out their planning activities, managers obtain feedback to ensure that
f f f f f f f f f f f
the plan is actually carried out and is appropriately modified as circumstances change.
f f f f f f f f f f f f f
Answer: False Level: Medium f f f f LO: 2 f
7. The controller occupies a line position in an organization.
f f f f f f f f
Answer: False Level: Easy f ff f f LO: 2 f
8. Decentralization means the delegation of decision-making authority throughout an f f f f f f f f
organization by allowing managers at various operating levels to make key decisions
f f f f f f f f f f f f
relating to their own area of responsibility.
f f f f f f f
Answer: True Level: Easy LO: 2 f f f fff f
4 Garrison, fManagerial fAccounting, f12th fEdition
, 9. A firm's organization chart will normally show both the formal and informal lines of
f f f f f f f f f f f f f
reporting and communication.
f f f
Answer: False Level: Easy f ff f f LO: 2 f
10. The Chief Financial Officer of an organization is responsible for ensuring that line
f f f f f f f f f f f f
operations run smoothly.
f f f
Answer: False Level: Medium f f f f LO: 2 f
11. Traditionally, companies have maintained large amounts of raw materials, work in
f f f f f f f f f f
process, and finished goods inventories to act as buffers so that operations can proceed
f f f f f f f f f f f f f f
smoothly even if there are unanticipated disruptions.
f f f f f f f
Answer: True Level: Medium f f f f LO: 3 f
12. Process Reengineering is generally considered to be a more radical approach to
f f f f f f f f f f f
improvement than Total Quality Management.
f f f f f
Answer: True Level: Easy LO: 3
f f f fff f
13. Process Reengineering emphasizes a team approach involving front-line workers,
f f f f f f f f
whereas Total Quality Management is usually implemented using outside specialists
f f f f f f f f f f
and is imposed from above.
f f f f f
Answer: False Level: Medium f f f f LO: 3 f
14. If ethical standards were not generally followed, one of the results would probably be
f f f f f f f f f f f f f
fewer goods and services available in the marketplace.
f f f f f f f f
Answer: True Level: Medium f f f f LO: 4 f
15. The Standards of Ethical Conduct for Management Accountants promulgated by the
f f f f f f f f f f
Institute of Management Accountants specifically state that management accountants'
f f f f f f f f f
sole ethical responsibility is to not break any laws.
f f f f f f f f f
Answer: False Level: Easy f ff f f LO: 4 f
Garrison, fManagerial fAccounting, f12th fEdition 5
, Chapter 1 Managerial Accounting and the Business Environment
f f f f f f f
Multiple Choice Questions
f f
16. Management accounting focuses primarily on providing data for: f f f f f f f
A) internal uses by managers. f f f
B) external uses by stockholders and creditors. f f f f f
C) external uses by the Internal Revenue Service. f f f f f f
D) external uses by the Securities and Exchange Commission.
f f f f f f f
Answer: A Level: Easy f f f f LO: 1 f
17. Managerial accounting: f
A) is more future oriented than financial accounting.
f f f f f f
B) tends to summarize information more than financial accounting
f f f f f f f
C) is primarily concerned with providing information to external users.
f f f f f f f f
D) is more concerned with precision than timeliness.
f f f f f f
Answer: A Level: Easy f f f f LO: 1 f
18. Compared to financial accounting, managerial accounting places more emphasis on:
f f f f f f f f f
A) the flexibility of information.
f f f
B) the precision of information.
f f f
C) the timeliness of information.
f f f
D) both A and C above. f f f f
Answer: D Level: Easy f f f f LO: 1 f
19. The function of management that compares planned results to actual results is known
f f f f f f f f f f f f
as:
f
A) planning.
B) directing and motivating. f f
C) controlling.
D) decision making. f
Answer: C Level: Easy f f f f LO: 2 f
20. Which of the functions of management involves overseeing day-to-day activities?
f f f f f f f f f
A) Planning
B) Directing and motivating f f
C) Controlling
D) Decision making f
Answer: B Level: Easy f f f f LO: 2 f
6 Garrison, fManagerial fAccounting, f12th fEdition
