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1 Copyright © 2014 Pearson Education, Inc.Horngren's Financial & Managerial Accounting, 4e (Nobles) Chapter 16 Introduction to Managerial Accounting
Learning Objective 16-1
1) Managerial accounting focuses on providing information for internal planning and control.
Answer: TRUE
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provides information to external stakeholders.
Answer: FALSE
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
3) The IMA standards of ethical practice require managerial accountants to maintain their professional competence.
Answer: TRUE
Diff: 1
LO: 16-1
AACSB: Ethical Understanding
AICPA Functional: Reporting
4) The accountant for Myra Lido deliberately deferred cash payments for business expenses in order to record a higher operating cash flow for the company. As long as the amount was not material, this would not be considered unethical behavior.
Answer: FALSE
Diff: 1
LO: 16-1
AACSB: Ethical Understanding
AICPA Functional: Reporting
5) 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
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
Horngrens Financial and Managerial Accounting The Managerial Chapters 4th Edition Nobles Test Bank Visit TestBankDeal.com to get complete for all chapters
2 Copyright © 2014 Pearson Education, Inc.6) Management accounting reporting by a public firm is required to follow the rules of GAAP and guidelines of the Securities Exchange Commission.
Answer: FALSE
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
7) A budget is a managerial accounting tool used in the planning process.
Answer: TRUE
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
8) Financial reporting is typically much more detailed than managerial accounting.
Answer: FALSE
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
9) The IMA Standards of Ethical Practice include confidentiality, competence, credibility, and integrity.
Answer: TRUE
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
10) ERP systems can integrate all of a company's functions, departments, and data into a single system.
Answer: TRUE
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
11) Which of the following is an objective of management accounting?
- to generate financial statements of a company for tax reporting
- to provide information to business managers to assist them in controlling their business
- to provide information to shareholders to assist them with their investment decisions
- to ensure that the reports produced for internal and external business purposes are GAAP compliant
Answer: B
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
3 Copyright © 2014 Pearson Education, Inc.12) Which of the following statements is true of management accounting?
- The external stakeholders of a company are the primary users of management accounting.
- Management accounting information is used to help managers plan and control their operations.
- An external audit by an independent CPA is required for management accounting information.
- Management accounting information must comply with Generally Accepted Accounting Principles.
Answer: B
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
13) Management accounting information of a company is primarily used by ________.
- its customers to understand the pricing of the product
- its creditors to understand the credibility of the business
- its employees to plan and control operations
- its investors to make their investment decisions
Answer: C
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
14) Which of the following statements is true of financial accounting?
- It provides information to investors needed for their investment decisions.
- It provides forward-looking information needed for managing and delegating operations.
- It focuses on detailed reports for parts of the company rather than the whole company.
- It focuses on planning and controlling day-to-day operations.
Answer: A
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
15) Management's accountability to its suppliers and vendors is to ________.
- provide products to customers that are safe and free of defects
- obey laws and pay taxes timely
- provide a return on shareholders' investment
- make timely payments and comply with contract terms
Answer: D
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
4 Copyright © 2014 Pearson Education, Inc.16) How is the management of a company accountable to its employees?
- The management must provide products that are safe and free of defects.
- The management must provide a safe workplace.
- The management must ensure that it earns a net positive return on its investments.
- The management must ensure the business is environmentally responsible to its community.
Answer: B
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
17) Management of a company is accountable to ________ for obeying laws and paying taxes.
- the natural environment
- its asset vendors
- the securities exchange
- the government
Answer: D
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
18) In which of the following ways is the management of a company accountable to its communities?
- making timely interest payments to creditors and dividend payments to investors
- ensuring the company's environmental impact is not harmful to its area of operations
- providing a capital return on the shareholders' investment
- repaying principal and interest to the suppliers
Answer: B
Diff: 1
LO: 16-1
AACSB: Concept
AICPA Functional: Reporting
19) Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business's managerial accounting?
- comparing actual performance to previously budgeted amounts
- creating detailed budgets
- implementing operational plans
- evaluating results of operations
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