TEST BANK
j
Financial and Managerial Accounting:
j j j
Managerial Chapters, 7th Edition
j j j
(Miller-Nobles) Chapter 1-11
j j
,Chapter M:1 j Introduction to Managerial Accounting j j j
Learning Objective M:1-1 j j
1) Managerial accounting focuses on providing information for internal planning and control.
j j j j j j j j j j
Answer: TRUE
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provides
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information to external stakeholders.
j j j j
Answer: FALSE j
Explanation: The reverse is true. Financial accounting serves external stakeholder information needswhile
j j j j j j j j j j j j
managerial accounting serves the needs of managers and internal staff.
j j j j j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
3) Financial statements prepared for investors and creditors often include forward-looking information
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because they make decisions based on a company's future prospects.
j j j j j j j j j j
Answer: FALSE j
Explanation: Financial statements provide mostly historical information; relevant and faithfullyrepresentative
j j j j j j j j j j
information and focused on the past.
j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
4) Managerial accounting reporting by a public firm is required to follow the rules of GAAP.Answer:
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FALSE
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Explanation: Managerial accounting information is not guided by GAAP but rather by the concept ofusefulness
j j j j j j j j j j j j j j j
to management for decision making purposes.
j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
,H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
5) Financial reporting is typically much more detailed than managerial accounting.
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Answer: FALSE
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Explanation: Financial reporting is typically less detailed than managerial accounting information.
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Financial accounting reporting is usually summary reports, prepared primarily on the company as a whole,
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usually on a quarterly or annual basis.
j j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
6) Managerial accounting provides financial statements that report results of operations, financial
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position, and cash flows both to managers and to external stockholders.
j j j j j j j j j j j
Answer: FALSE j
Explanation: Managerial accounting providesthe informationneeded to plan and control operations and
j j j j j j j j j j j j
therefore serves the information needs of internal parties such as managers and staff.
j j j j j j j j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
7) Which of the following is a focus of managerial accounting?
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A) to generate a company's financial statements for tax reporting
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B) to provide information to business managers to assist them in controlling their businesses
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C) to provide information to shareholders to assist them with their investment decisions
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D) to ensure that the reports produced for internal and external business purposes are GAAP compliant
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Answer: B
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
8) Which of the following statements is true of managerial accounting?
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A) The external stakeholders of a company are the primary users of managerial accounting.
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B) Managerial accounting information is used to help managers plan, direct and control their operations.
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C) An external audit by an independent CPA is required for managerial accounting information.
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D) Managerial accounting information must comply with Generally Accepted Accounting Principles. j j j j j j j j j
Answer: B
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
, PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
9) Managerial accounting information for a company is primarily used by j j j j j j j j j .
A) its customers to understand the pricing of the product
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B) its creditors to understand the credibility of the business
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C) its employees to plan, direct and control operations
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D) its investors to make their investment decisions
j j j j j j
Answer: C
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
10) Which of the following statements is true of financial accounting?
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A) It provides information to investors needed for their investment decisions.
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B) It provides future focused information needed for managing and delegating operations.
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C) It focuses on detailed reports for parts of the company rather than the whole company.
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D) It focuses on planning, directing and controlling day-to-day operations.
j j j j j j j j
Answer: A
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
11) Which of the following is the primary focus of managerial accounting?
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A) providing information that managers need to make operational decisions j j j j j j j j
B) providing historical data to investors and creditors j j j j j j
C) providing summarized results of operations j j j j
D) providing information to comply with laws and regulations of government bodies
j j j j j j j j j j
Answer: A
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
12) Which of the following is the primary focus of financial accounting?
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A) providing information that managers need to make operational decisions j j j j j j j j
B) providing summarized information on operational results to investors and creditors
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C) providing information to managers to assist in planning, directing and controlling operations
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D) providing highly detailed information on product lines, regions, and divisions
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Answer: B
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge j j j
j
Financial and Managerial Accounting:
j j j
Managerial Chapters, 7th Edition
j j j
(Miller-Nobles) Chapter 1-11
j j
,Chapter M:1 j Introduction to Managerial Accounting j j j
Learning Objective M:1-1 j j
1) Managerial accounting focuses on providing information for internal planning and control.
j j j j j j j j j j
Answer: TRUE
j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provides
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information to external stakeholders.
j j j j
Answer: FALSE j
Explanation: The reverse is true. Financial accounting serves external stakeholder information needswhile
j j j j j j j j j j j j
managerial accounting serves the needs of managers and internal staff.
j j j j j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
3) Financial statements prepared for investors and creditors often include forward-looking information
j j j j j j j j j j
because they make decisions based on a company's future prospects.
j j j j j j j j j j
Answer: FALSE j
Explanation: Financial statements provide mostly historical information; relevant and faithfullyrepresentative
j j j j j j j j j j
information and focused on the past.
j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
4) Managerial accounting reporting by a public firm is required to follow the rules of GAAP.Answer:
j j j j j j j j j j j j j j j
FALSE
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Explanation: Managerial accounting information is not guided by GAAP but rather by the concept ofusefulness
j j j j j j j j j j j j j j j
to management for decision making purposes.
j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
,H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
5) Financial reporting is typically much more detailed than managerial accounting.
j j j j j j j j j
Answer: FALSE
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Explanation: Financial reporting is typically less detailed than managerial accounting information.
j j j j j j j j j j
Financial accounting reporting is usually summary reports, prepared primarily on the company as a whole,
j j j j j j j j j j j j j j j
usually on a quarterly or annual basis.
j j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
6) Managerial accounting provides financial statements that report results of operations, financial
j j j j j j j j j j
position, and cash flows both to managers and to external stockholders.
j j j j j j j j j j j
Answer: FALSE j
Explanation: Managerial accounting providesthe informationneeded to plan and control operations and
j j j j j j j j j j j j
therefore serves the information needs of internal parties such as managers and staff.
j j j j j j j j j j j j j
Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
7) Which of the following is a focus of managerial accounting?
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A) to generate a company's financial statements for tax reporting
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B) to provide information to business managers to assist them in controlling their businesses
j j j j j j j j j j j j
C) to provide information to shareholders to assist them with their investment decisions
j j j j j j j j j j j
D) to ensure that the reports produced for internal and external business purposes are GAAP compliant
j j j j j j j j j j j j j j
Answer: B
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
8) Which of the following statements is true of managerial accounting?
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A) The external stakeholders of a company are the primary users of managerial accounting.
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B) Managerial accounting information is used to help managers plan, direct and control their operations.
j j j j j j j j j j j j j
C) An external audit by an independent CPA is required for managerial accounting information.
j j j j j j j j j j j j
D) Managerial accounting information must comply with Generally Accepted Accounting Principles. j j j j j j j j j
Answer: B
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge
j j j
AICPA Functional: Reporting
j j j
, PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
9) Managerial accounting information for a company is primarily used by j j j j j j j j j .
A) its customers to understand the pricing of the product
j j j j j j j j
B) its creditors to understand the credibility of the business
j j j j j j j j
C) its employees to plan, direct and control operations
j j j j j j j
D) its investors to make their investment decisions
j j j j j j
Answer: C
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
10) Which of the following statements is true of financial accounting?
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A) It provides information to investors needed for their investment decisions.
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B) It provides future focused information needed for managing and delegating operations.
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C) It focuses on detailed reports for parts of the company rather than the whole company.
j j j j j j j j j j j j j j
D) It focuses on planning, directing and controlling day-to-day operations.
j j j j j j j j
Answer: A
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
11) Which of the following is the primary focus of managerial accounting?
j j j j j j j j j j
A) providing information that managers need to make operational decisions j j j j j j j j
B) providing historical data to investors and creditors j j j j j j
C) providing summarized results of operations j j j j
D) providing information to comply with laws and regulations of government bodies
j j j j j j j j j j
Answer: A
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge j j j
AICPA Functional: Reporting
j j j
PE Question Type: Concept
j j j
H2: Why Is Managerial Accounting Important? (H1)
j j j j j j
12) Which of the following is the primary focus of financial accounting?
j j j j j j j j j j
A) providing information that managers need to make operational decisions j j j j j j j j
B) providing summarized information on operational results to investors and creditors
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C) providing information to managers to assist in planning, directing and controlling operations
j j j j j j j j j j j
D) providing highly detailed information on product lines, regions, and divisions
j j j j j j j j j
Answer: B
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Diff: 1 j
LO: M:1-1
j
AACSB: Application of knowledge j j j
