Solution Manual for Horngren’s Cost Accounting, 17th Edition by Srikant M. Datar & Madhav V. Rajan (Pearson, 2020) | ISBN: 9780135628478 | Chapters 1-24

CHAPTER 1
THE ACCOUNTANT’S ROLE IN THE
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ORGANIZATION f




TRUE/FALSE

1. Management accounting information focuses on external reporting.f f f f f f




Answer: False Difficulty: 1 Objective: 1
Terms to Learn: f management accounting
Management accounting information focuses on internal reporting.f f f f f f




2. A good cost accounting system is narrowly focused on a continuous reduction of
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costs.
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Answer: False Difficulty: 2 Objective: 1
Terms to Learn: f cost accounting
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A good cost accounting system is broadly focused to provide information that helps
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managers at all levels implement, monitor, and evaluate company strategies.
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3. Modern cost accounting plays a significant role in management decision making.
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Answer: True Difficulty: 1 Objective: 1
Terms to Learn: f f cost accounting f




4. The balance sheet, income statement, and statement of cash flows are used for
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financial accounting, but not for management accounting.
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Answer: False Difficulty: 1 Objective: 1
Terms to Learn: f financial accounting
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The balance sheet, income statement, and statement of cash flows are used for
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financial accounting and also for management accounting.
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5. Financial accounting is broader in scope than management accounting.
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Answer: False Difficulty: 2
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Terms to Learn:
f f financial accounting, management accounting
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Management accounting is broader in scope than financial accounting.
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6. Cost accounting measures and reports short-term, long-term, financial, and
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nonfinancial information.
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Answer: True f f Difficulty: 2 f f Objective: f f 1
Terms to Learn: f f cost accounting f




7. Cost management provides information that helps increase value for customers.
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1-1

, Answer: True Difficulty: 1 Objective: 1
Terms to Learn: f f cost management f




8. An ideal database should consist of data that could be used for a single purpose
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only.
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Answer: False Difficulty: 2 Objective: 1
Terms to Learn: f f management accounting f


An ideal database should be able to be used for multiple purposes.
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9. An Enterprise Resource Planning (ERP) System is a single database that collects
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data and feeds into applications that support each of the company’s business
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activities, such as purchases, production, distribution, and sales.
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Answer: True Difficulty: 1 Objective: 1
Terms to Learn: f management accounting

10. Cost accounting provides information only for management accounting purposes.
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Answer: False Difficulty: 1 Objective: 1
Terms to Learn: f f cost accounting f


Cost accounting provides information for financial accounting as well as for
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management accounting purposes.
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11. Cost management involves long-term and short-term decisions that attempt to
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increase value for customers and lower costs of products or services.
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Answer: True Difficulty: 1 Objective: 1
Terms to Learn: f f cost management f




12. All strategies should be evaluated regarding the resources and capabilities of the
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company.
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Answer: True Difficulty: 1 Objective: 2
Terms to Learn: f strategy

13. The best-designed strategies are valuable whether or not they are effectively
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implemented.
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Answer: False Difficulty: 1 Objective: 2
Terms to Learn: f strategy
Implementation is essential or the strategy is useless.
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,14. The key to a company’s success is creating value for customers while
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differentiating itself from its competitors.
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Answer: True Difficulty: 1 Objective: 2
Terms to Learn: f strategy

15. The key to a company’s success is always to be the low cost producer in a particular
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industry.
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Answer: False Difficulty: 2 Objective: 2
Terms to Learn: f strategy
The low cost producer in a particular industry will not necessarily be successful.
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16. Companies generally follow one of two basic strategies: 1) providing a quality
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product or service at low prices, or 2) offering a unique product or service often
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priced higher than competing products.
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Answer: True Difficulty: 2 Objective: 2
Terms to Learn: f strategy

17. Management accountants should have little or no role in deciding on a company’s
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strategy.
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Answer: False Difficulty: 1 Objective: 2
Terms to Learn: f strategy
Management accountants should play a significant role in deciding on a company’s
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strategy.
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18. Companies can decide on an appropriate strategy based strictly on internally
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available information.
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Answer: False Difficulty: 1 Objective: 2
Terms to Learn: f strategy
Companies must obtain external information as well as internal information to decide
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on an appropriate strategy.
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19. Strategic cost management describes cost management that specifically focuses on
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strategic issues.
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Answer: True Difficulty: 1 Objective: 2
Terms to Learn: f f strategic cost management f f




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, 20. The supply chain refers to the sequence of business functions in which customer
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usefulness is added to products or services.
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Answer: False Difficulty: 1 Objective: 3
Terms to Learn: f supply chain f


The value chain refers to the sequence of business functions in which customer
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usefulness is added to products or services.
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21. An effective way to cut costs is to eliminate activities that do not improve the
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product attributes that customers value.
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Answer: True Difficulty: 1 Objective: 3
Terms to Learn: f f cost management f




22. For optimal planning success it is best if each business function within the value
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chain is performed one at a time in sequence.
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Answer: False Difficulty: 1 Objective: 3
Terms to Learn: f value chain
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Optimally, success is achieved when two or more of the individual business functions
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work concurrently as a team.
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23. For best results, cost management emphasizes independently coordinating supply
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chain activities within your company and not interfering with other companies.
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Answer: False Difficulty: 2 Objective: 3
Terms to Learn: f cost management
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Cost management emphasizes integrating and coordinating supply chain activities
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across all companies within the supply chain.
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24. Technological innovation has led to shorter product-life cycles and a need to bring
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new products to market more rapidly.
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Answer: True Difficulty: 1 Objective: 3
Terms to Learn: f f design of products, services, or processes
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25. Key success factors include cost, quality, timeliness, and innovation.
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Answer: True Difficulty: 1 Objective: 3
Terms to Learn: f value chain f




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