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Horngren's Financial and Managerial Accounting, The Financial Chapters Eighth Edition Tracie Miller-Nobles Brenda Mattison Horngren's Financial and Managerial Accounting - Test Bank by Lori Hatchell (Global Edition) 1 / 4
1 Copyright © 2024 Pearson Education, Inc.
Financial and Managerial Accounting: Financial Chapters, 8e (Miller-Nobles)
Chapter F:1 Accounting and the Business Environment
Learning Objective F:1-1
1) Accounting is the information system that measures business activities, processes the information into reports, and communicates the results to decision makers.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Why Is Accounting Important? (H1)
2) The knowledge of accounting is rarely used to help make business and personal financial decisions.
Answer: FALSE
Explanation: The knowledge of accounting is used daily to assist in making decisions for both businesses and personal items.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Why Is Accounting Important? (H1)
3) Accounting starts with economic activities that accountants review and evaluate using critical thinking and judgment to create useful information that helps individuals make good decisions.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Why Is Accounting Important? (H1)
4) Accounting is referred to as the language of business because it is the method of communicating business information to decision makers.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Why Is Accounting Important? (H1) 2 / 4
2 Copyright © 2024 Pearson Education, Inc.5) A model called the ________ was created to help students and the public understand what accounting is.
- Decision Making Model
- Business Model
- Pathways Vision Model
- Cost Model
Answer: C
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Why Is Accounting Important? (H1)
6) The Pathways Vision Model emphasizes that good decisions have an impact on
- accounting judgments and economic activity.
- accounting judgments only.
- economic activity only.
- neither accounting judgments nor economic activity.
Answer: A
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Why Is Accounting Important? (H1)
7) Managerial accounting focuses on providing information for external decision makers.
Answer: FALSE
Explanation: Managerial accounting focuses on providing information for internal decision makers.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information 8) Investors primarily use managerial accounting information for decision-making purposes.
Answer: FALSE
Explanation: External users (investors) use financial accounting information.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information 3 / 4
3 Copyright © 2024 Pearson Education, Inc.9) A creditor is a person who owes money to the business.
Answer: FALSE
Explanation: A creditor is a person to whom a business owes money.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information 10) Income tax is calculated using accounting information.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information 11) Financial accounting focuses on information for decision makers outside of the business, such as creditors and taxing authorities.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information 12) Business owners use accounting information to set goals, evaluate progress toward those goals, and make adjustments when needed.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information 13) Outside investors ordinarily use financial accounting information to decide whether or not to invest in a business.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information
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