Test Bank for Horngren's Financial & Managerial Accounting The Managerial Chapters, 7th edition by Tracie Miller-Nobles, Brenda Mattison

,Chapter M:1 Introduction to Managerial Accounting

Learning Objective M:1-1

1) Managerial accounting focuses on providing information for internal planning and contro
l.VAnswer: TRUE
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provide
s information to external stakeholders.
Answer: FALSE
Explanation: The reverse is true. Financial accounting serves external stakeholder Vinformation needs whi
le managerial accounting serves the needs ofVmanagers and internal staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA 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 representat
ive information and focused on the past.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA 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 GAA
P.VAnswer: FALSE
Explanation: Managerial accounting information is not guided by GAAP but rather by the concept of u
sefulness to management for decision making purposes.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA Functional: Reporting
PE Question Type: Concept

,H2: Why Is Managerial Accounting Important? (H1)




5) Financial reporting is typically much more detailed than managerial accounting
.VAnswer: 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 A
ICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

6) Managerial accounting provides financial statements that report results of Voperations, financi
al 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 a
nd therefore serves the information needs ofVinternal parties such as managers and staff.
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA 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 complia
ntVAnswer: B
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

8) Which of the following statements is true ofVmanagerial 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 A
ICPA Functional: Reporting

, PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

9) Managerial accounting information for a company is primarily used by .
A) its customers to understand the pricing of the product
B) its creditors to understand the credibilityVof the business
C) its employees to plan, direct and control operations
D) its investors to make their investment decision
sVAnswer: C
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

10) Which of the following statements is true ofVfinancial accounting?
A) It provides information to investors needed for their investment decisions.
B) It provides future focused information needed for managing and delegating operations.
C) It focuses on detailed reports for parts ofVthe company rather than the whole company.
D) It focuses on planning, directing and controlling day-to-
day operations.VAnswer: A
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

11) Which of the following is the primary focus of managerial accounting?
A) providing information that managers need to make operational decisions
B) providing historical data to investors and creditors
C) providing summarized results ofVoperations
D) providing information to comply with laws and regulations of government bodie
sVAnswer: A
Diff: 1
LO: M:1-1
AACSB: Application of knowledge A
ICPA Functional: Reporting
PE Question Type: Concept
H2: Why Is Managerial Accounting Important? (H1)

12) Which of the following is the primary focus ofVfinancial accounting?
A) providing information that managers need to make operational decisions
B) providing summarized information on operational results to investors and creditors
C) providing information to managers to assist in planning, directing and controlling operations
D) providing highly detailed information on product lines, regions, and divisions
VAnswer: B

Diff: 1
LO: M:1-1
AACSB: Application of knowledge