1-1 Test Bank for Davis & Davis, Managerial Accounting, 4/e
TEST BANK
Managerial Accounting 4th Edition
By Charles Davis Elizabeth Davis Chapter 1 - 13
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Table Of Contents
1. Accounting as a Tool for Management
2.Cost Behavior and Cost Estimation
3. Cost-Volume-Profit Analysis and Pricing Decisions
4. Product Costs and Job Order Costing
5. Planning and Forecasting
5A: Planning and Forecasting in a Retail Setting* (online only)
6. Performance Evaluation: Variance Analysis
7. Activity-Based Costing and Activity-Based Management
8. Using Accounting Information to Make Managerial Decisions
9. Capital Budgeting
10. Decentralization and Performance Evaluation
11. Performance Evaluation Revisited: A Balanced Approach
12. Financial Statement Analysis
13. Statement of Cash Flows
,1-3 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
“thegeneration 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 financialaccounting 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, evenif 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
planningprovides 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 theinformation 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
costsand cost variances will be more useful to managers than information about
researchand development.
, 1-4 Test Bank for Davis & Davis, Managerial Accounting, 4/e
5. Discuss the importance of ethical behavior in managerial
accounting (Unit1.3)
Ethical behavior means knowing right from wrong and then doing the right thing.
Manycompanies 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 toethical behavior can lead to superior financial performance.
TEST BANK
Managerial Accounting 4th Edition
By Charles Davis Elizabeth Davis Chapter 1 - 13
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Table Of Contents
1. Accounting as a Tool for Management
2.Cost Behavior and Cost Estimation
3. Cost-Volume-Profit Analysis and Pricing Decisions
4. Product Costs and Job Order Costing
5. Planning and Forecasting
5A: Planning and Forecasting in a Retail Setting* (online only)
6. Performance Evaluation: Variance Analysis
7. Activity-Based Costing and Activity-Based Management
8. Using Accounting Information to Make Managerial Decisions
9. Capital Budgeting
10. Decentralization and Performance Evaluation
11. Performance Evaluation Revisited: A Balanced Approach
12. Financial Statement Analysis
13. Statement of Cash Flows
,1-3 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
“thegeneration 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 financialaccounting 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, evenif 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
planningprovides 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 theinformation 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
costsand cost variances will be more useful to managers than information about
researchand development.
, 1-4 Test Bank for Davis & Davis, Managerial Accounting, 4/e
5. Discuss the importance of ethical behavior in managerial
accounting (Unit1.3)
Ethical behavior means knowing right from wrong and then doing the right thing.
Manycompanies 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 toethical behavior can lead to superior financial performance.
