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 oaccounting oinformation ofor oa ocompany ois oprimarily oused oby .
A) its ocustomers oto ounderstand othe opricing oof othe oproduct
B) its ocreditors oto ounderstand othe ocredibility oof othe obusiness
C) its oemployees oto oplan, odirect oand ocontrol ooperations
D) its oinvestors oto omake otheir oinvestment
odecisionsoAnswer: o C
Diff: o1
LO: o M:1-1
AACSB: o Application oof
oknowledgeoAICPA oFunctional:
o Reporting
PE oQuestion oType: o Concept
H2: o Why oIs oManagerial oAccounting oImportant? o(H1)
10) Which oof othe ofollowing ostatements ois otrue oof ofinancial oaccounting?
A) It oprovides oinformation oto oinvestors oneeded ofor otheir oinvestment odecisions.
B) It oprovides ofuture ofocused oinformation oneeded ofor omanaging oand odelegating ooperations.
C) It ofocuses oon odetailed oreports ofor oparts oof othe ocompany orather othan othe owhole ocompany.
D) It ofocuses oon oplanning, odirecting oand ocontrolling oday-to-day
ooperations.oAnswer: o A
Diff: o1
LO: o M:1-1
AACSB: o Application oof
oknowledgeoAICPA oFunctional:
o Reporting
PE oQuestion oType: o Concept
H2: o Why oIs oManagerial oAccounting oImportant? o(H1)
11) Which oof othe ofollowing ois othe oprimary ofocus oof omanagerial oaccounting?
A) providing oinformation othat omanagers oneed oto omake ooperational odecisions
B) providing ohistorical odata oto oinvestors oand ocreditors
C) providing osummarized oresults oof ooperations
D) providing oinformation oto ocomply owith olaws oand oregulations oof ogovernment
obodiesoAnswer: o A
Diff: o1
LO: o M:1-1
AACSB: o Application oof
oknowledgeoAICPA oFunctional:
o Reporting
PE oQuestion oType: o Concept
H2: o Why oIs oManagerial oAccounting oImportant? o(H1)
12) Which oof othe ofollowing ois othe oprimary ofocus oof ofinancial oaccounting?
A) providing oinformation othat omanagers oneed oto omake ooperational odecisions
B) providing osummarized oinformation oon ooperational oresults oto oinvestors oand ocreditors
C) providing oinformation oto omanagers oto oassist oin oplanning, odirecting oand ocontrolling ooperations
D) providing ohighly odetailed oinformation oon oproduct olines, oregions, oand
odivisionsoAnswer: o B
Diff: o1
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 oaccounting oinformation ofor oa ocompany ois oprimarily oused oby .
A) its ocustomers oto ounderstand othe opricing oof othe oproduct
B) its ocreditors oto ounderstand othe ocredibility oof othe obusiness
C) its oemployees oto oplan, odirect oand ocontrol ooperations
D) its oinvestors oto omake otheir oinvestment
odecisionsoAnswer: o C
Diff: o1
LO: o M:1-1
AACSB: o Application oof
oknowledgeoAICPA oFunctional:
o Reporting
PE oQuestion oType: o Concept
H2: o Why oIs oManagerial oAccounting oImportant? o(H1)
10) Which oof othe ofollowing ostatements ois otrue oof ofinancial oaccounting?
A) It oprovides oinformation oto oinvestors oneeded ofor otheir oinvestment odecisions.
B) It oprovides ofuture ofocused oinformation oneeded ofor omanaging oand odelegating ooperations.
C) It ofocuses oon odetailed oreports ofor oparts oof othe ocompany orather othan othe owhole ocompany.
D) It ofocuses oon oplanning, odirecting oand ocontrolling oday-to-day
ooperations.oAnswer: o A
Diff: o1
LO: o M:1-1
AACSB: o Application oof
oknowledgeoAICPA oFunctional:
o Reporting
PE oQuestion oType: o Concept
H2: o Why oIs oManagerial oAccounting oImportant? o(H1)
11) Which oof othe ofollowing ois othe oprimary ofocus oof omanagerial oaccounting?
A) providing oinformation othat omanagers oneed oto omake ooperational odecisions
B) providing ohistorical odata oto oinvestors oand ocreditors
C) providing osummarized oresults oof ooperations
D) providing oinformation oto ocomply owith olaws oand oregulations oof ogovernment
obodiesoAnswer: o A
Diff: o1
LO: o M:1-1
AACSB: o Application oof
oknowledgeoAICPA oFunctional:
o Reporting
PE oQuestion oType: o Concept
H2: o Why oIs oManagerial oAccounting oImportant? o(H1)
12) Which oof othe ofollowing ois othe oprimary ofocus oof ofinancial oaccounting?
A) providing oinformation othat omanagers oneed oto omake ooperational odecisions
B) providing osummarized oinformation oon ooperational oresults oto oinvestors oand ocreditors
C) providing oinformation oto omanagers oto oassist oin oplanning, odirecting oand ocontrolling ooperations
D) providing ohighly odetailed oinformation oon oproduct olines, oregions, oand
odivisionsoAnswer: o B
Diff: o1
