Test Bank for Managerial Accounting 12 Edition by Garrison
Noreen Brewer.
,Chapter 1 Managerial Accounting and the Business Environment
True/False Questions
1. Although financial and managerial accounting differ in many ways, they are similar in that
both rely on the same underlying financial data.
Answer: True Level: Medium LO: 1
2. Managerial accounting is a branch of financial accounting and serves essentially the same
purposes as financial accounting.
Answer: False Level: Medium LO: 1
3. Managerial accounting places greater emphasis on the future than financial
accounting, which is primarily concerned with the past.
Answer: True Level: Easy LO: 1
4. Managerial accounting is not needed in a non-profit or governmental organization.
Answer: False Level: Easy LO: 1
5. When carrying out their planning activities, managers select a course of action and
specify how the action will be implemented.
Answer: True Level: Easy LO: 2
6. When carrying out their planning activities, managers obtain feedback to ensure that the
plan is actually carried out and is appropriately modified as circumstances change.
Answer: False Level: Medium LO: 2
7. The controller occupies a line position in an organization.
Answer: False Level: Easy LO: 2
8. Decentralization means the delegation of decision-making authority throughout an
organization by allowing managers at various operating levels to make key decisions
relating to their own area of responsibility.
Garrison, Managerial Accounting, 12th Edition 3
,Chapter 1 Managerial Accounting and the Business Environment
Answer: True Level: Easy LO: 2
4 Garrison, Managerial Accounting, 12th Edition
, Chapter 1 Managerial Accounting and the Business Environment
9. A firm's organization chart will normally show both the formal and informal lines of
reporting and communication.
Answer: False Level: Easy LO: 2
10. The Chief Financial Officer of an organization is responsible for ensuring that line
operations run smoothly.
Answer: False Level: Medium LO: 2
11. Traditionally, companies have maintained large amounts of raw materials, work in process,
and finished goods inventories to act as buffers so that operations can proceed smoothly even
if there are unanticipated disruptions.
Answer: True Level: Medium LO: 3
12. Process Reengineering is generally considered to be a more radical approach to
improvement than Total Quality Management.
Answer: True Level: Easy LO: 3
13. Process Reengineering emphasizes a team approach involving front-line workers, whereas
Total Quality Management is usually implemented using outside specialists and is imposed
from above.
Answer: False Level: Medium LO: 3
14. If ethical standards were not generally followed, one of the results would probably be fewer
goods and services available in the marketplace.
Answer: True Level: Medium LO: 4
15. The Standards of Ethical Conduct for Management Accountants promulgated by the
Institute of Management Accountants specifically state that management accountants' sole
ethical responsibility is to not break any laws.
Answer: False Level: Easy LO: 4
Garrison, Managerial Accounting, 12th Edition 5
Noreen Brewer.
,Chapter 1 Managerial Accounting and the Business Environment
True/False Questions
1. Although financial and managerial accounting differ in many ways, they are similar in that
both rely on the same underlying financial data.
Answer: True Level: Medium LO: 1
2. Managerial accounting is a branch of financial accounting and serves essentially the same
purposes as financial accounting.
Answer: False Level: Medium LO: 1
3. Managerial accounting places greater emphasis on the future than financial
accounting, which is primarily concerned with the past.
Answer: True Level: Easy LO: 1
4. Managerial accounting is not needed in a non-profit or governmental organization.
Answer: False Level: Easy LO: 1
5. When carrying out their planning activities, managers select a course of action and
specify how the action will be implemented.
Answer: True Level: Easy LO: 2
6. When carrying out their planning activities, managers obtain feedback to ensure that the
plan is actually carried out and is appropriately modified as circumstances change.
Answer: False Level: Medium LO: 2
7. The controller occupies a line position in an organization.
Answer: False Level: Easy LO: 2
8. Decentralization means the delegation of decision-making authority throughout an
organization by allowing managers at various operating levels to make key decisions
relating to their own area of responsibility.
Garrison, Managerial Accounting, 12th Edition 3
,Chapter 1 Managerial Accounting and the Business Environment
Answer: True Level: Easy LO: 2
4 Garrison, Managerial Accounting, 12th Edition
, Chapter 1 Managerial Accounting and the Business Environment
9. A firm's organization chart will normally show both the formal and informal lines of
reporting and communication.
Answer: False Level: Easy LO: 2
10. The Chief Financial Officer of an organization is responsible for ensuring that line
operations run smoothly.
Answer: False Level: Medium LO: 2
11. Traditionally, companies have maintained large amounts of raw materials, work in process,
and finished goods inventories to act as buffers so that operations can proceed smoothly even
if there are unanticipated disruptions.
Answer: True Level: Medium LO: 3
12. Process Reengineering is generally considered to be a more radical approach to
improvement than Total Quality Management.
Answer: True Level: Easy LO: 3
13. Process Reengineering emphasizes a team approach involving front-line workers, whereas
Total Quality Management is usually implemented using outside specialists and is imposed
from above.
Answer: False Level: Medium LO: 3
14. If ethical standards were not generally followed, one of the results would probably be fewer
goods and services available in the marketplace.
Answer: True Level: Medium LO: 4
15. The Standards of Ethical Conduct for Management Accountants promulgated by the
Institute of Management Accountants specifically state that management accountants' sole
ethical responsibility is to not break any laws.
Answer: False Level: Easy LO: 4
Garrison, Managerial Accounting, 12th Edition 5
