Managerial Accounting 16th Edition Carl Warren TEST BANK

Test Bank

,Name: Class: Date:

Chapter 01: Introduction to Managerial Accounting
True / False

1. Managerial accounting reports must be prepared according to generally accepted accounting principles.
a. True
b. False
ANSWER: False

2. Managerial accounting uses only past data in reports to aid management in the decision-making process.
a. True
b. False
ANSWER: False

3. Managerial accounting information includes both historical and estimated data.
a. True
b. False
ANSWER: True

4. Although finance and accounting professionals often work within verticals and other horizontals, they do not normally
report directly to the heads of those units or departments.
a. True
b. False
ANSWER: True

5. The philosophy of focusing on “unexpected” good or bad performance is called management by exception.
a. True
b. False
ANSWER: True

6. The functions reporting to the CFO sometimes are grouped together and referred to as corporate finance.
a. True
b. False
ANSWER: True

7. In smaller companies, the term controller may be used to refer to the chief financial officer.
a. True
b. False
ANSWER: True

8. The role of horizontals is to provide services, assistance, and advice to the various verticals and other horizontal
departments.
a. True
b. False
ANSWER: True

9. Horizontals are departments within a company that are responsible for developing products.
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,Name: Class: Date:

Chapter 01: Introduction to Managerial Accounting
a. True
b. False
ANSWER: False

10. While no two company structures are identical, most large companies are organized in terms of verticals and
diagonals.
a. True
b. False
ANSWER: False

11. Verticals prepare their own income statements.
a. True
b. False
ANSWER: True

12. Managerial accounting reports are designed to meet the specific needs of a company’s management.
a. True
b. False
ANSWER: True

13. Strategic planning is the process of monitoring operating results and comparing actual results with the expected
results.
a. True
b. False
ANSWER: False

14. Operational planning is the process of developing the company’s short-term objectives and actions needed to achieve
the company’s long-term, strategic objectives.
a. True
b. False
ANSWER: True

15. Control is the process of choosing goals and deciding how to achieve them.
a. True
b. False
ANSWER: False

16. Evaluation is the process by which management monitors operations by comparing actual and expected results.
a. True
b. False
ANSWER: True

17. A major focus of managerial accounting is the development of costing information.
a. True
b. False
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, Name: Class: Date:

Chapter 01: Introduction to Managerial Accounting
ANSWER: True

18. Managerial accounting information is for external users as well as company managers.
a. True
b. False
ANSWER: False

19. A report analyzing how many products need to be sold to cover operating costs is not typically a managerial
accounting report.
a. True
b. False
ANSWER: False

20. A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial
accounting report.
a. True
b. False
ANSWER: True

21. A performance report that identifies the amount of employee downtime is a financial accounting report.
a. True
b. False
ANSWER: False

22. Managerial accounting provides useful information to managers on product costs.
a. True
b. False
ANSWER: True

23. In a service company, the cost of services is accumulated and reported as inventory.
a. True
b. False
ANSWER: False

24. A cost is a sacrifice made to obtain some benefit.
a. True
b. False
ANSWER: True

25. Goods that are partway through the manufacturing process, but not yet complete, are referred to as materials
inventory.
a. True
b. False
ANSWER: False

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