Copyright 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior

1 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Fundamental Managerial Accounting Concepts, 9e (Edmonds) Chapter 1 Management Accounting and Corporate Governance

1) Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?

• Economic data
• Financial data
• Nonfinancial data
• Financial, economic, and nonfinancial data

Answer: D

Explanation: Managers rely on financial, economic, and nonfinancial data to make decisions and evaluate performance.

Difficulty: 1 Easy

Topic: Users and Types of Information

Learning Objective: 01-01 Distinguish between managerial and financial accounting.

Bloom's: Remember

AACSB: Knowledge Application

AICPA: FN Decision Making; BB Industry

2) All of the following are features of managerial accounting except:

• information is provided primarily to insiders such as managers.
• information includes economic and non-financial data as well as financial data.
• information is characterized by objectivity, reliability, consistency, and accuracy.
• information is reported continuously with a present or future orientation.

Answer: C

Explanation: Managerial accounting is concerned with unregulated financial, economic, and nonfinancial data, which pertains more to the sub-units of the organization, that is current and future oriented, and that is designed primarily to meet the information needs of insiders.Financial accounting information is characterized by objectivity, reliability, consistency, and accuracy.

Difficulty: 1 Easy

Topic: Information Characteristics

Learning Objective: 01-01 Distinguish between managerial and financial accounting.

Bloom's: Remember

AACSB: Knowledge Application

AICPA: FN Decision Making; BB Industry

Fundamental Managerial Accounting Concepts 9th Edition Edmonds Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.3) Choose the answer that is not a distinguishing characteristic of financial accounting information.

• It is global information that reflects the performance of the whole company.
• It is focused primarily on the future.
• It is more concerned with financial data than physical or economic data.
• It is more highly regulated than managerial accounting information.

Answer: B

Explanation: Financial accounting deals with regulated, historical financial information that pertains to the whole company and is designed primarily to meet the information needs of outsiders.

Difficulty: 1 Easy

Topic: Information Characteristics

Learning Objective: 01-01 Distinguish between managerial and financial accounting.

Bloom's: Remember

AACSB: Knowledge Application

AICPA: FN Decision Making; BB Industry

4) Managerial accounting information is limited or restricted by which of the following authorities or principles?

• Securities and Exchange Commission
• Generally Accepted Accounting Principles
• Managerial Accounting Standards Board
• Value-Added Principle

Answer: D

Explanation: The value-added principle means that management accountants are free to engage in any information gathering and reporting activity so long as the activity adds value in excess of its cost.

Difficulty: 1 Easy

Topic: Regulation

Learning Objective: 01-01 Distinguish between managerial and financial accounting.

Bloom's: Remember

AACSB: Knowledge Application

AICPA: FN Decision Making; BB Industry

3 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.5) Select the incorrect statement regarding the relationship between type of user and type of information.

• Middle managers need more nonfinancial, or operational data than do senior executives.
• Assembly line supervisors need more immediate feedback on performance than do senior

executives.

• Senior executives need less aggregated information than do lower-level managers.
• Senior executives use general economic information as well as financial information.

Answer: C

Explanation: Senior executives need more aggregated information than do lower-level managers.

Difficulty: 1 Easy

Topic: Users and Types of Information

Learning Objective: 01-01 Distinguish between managerial and financial accounting.

Bloom's: Remember

AACSB: Knowledge Application

AICPA: FN Decision Making; BB Industry

6) Select the correct statement regarding managerial and financial accounting.

• Users of managerial accounting information desire greater aggregation than do users of

financial accounting information.

• Both managerial and financial accounting use economic and physical data in addition to

financial data.

• Financial accounting is more highly regulated than managerial accounting.
• Timeliness is more important in financial accounting than in managerial accounting.

Answer: C

Explanation: Financial accounting deals with regulated, historical, financial information that pertains to the whole company and is designed primarily to meet the information needs of outsiders. Managerial accounting is concerned with unregulated financial, economic, and nonfinancial data, which pertains more to the sub-units of the organization, that is current and future oriented, and that is designed primarily to meet the information needs of insiders.

Difficulty: 1 Easy

Topic: Regulation

Learning Objective: 01-01 Distinguish between managerial and financial accounting.

Bloom's: Remember

AACSB: Knowledge Application

AICPA: FN Decision Making; BB Industry

4 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.7) Which of the following most exemplifies the value-added principle?

• An ongoing process where continuous improvement is the goal.
• A competitive management program that emphasizes quality.
• Information gathering and reporting activities should be restricted to those activities that add

value in excess of their cost.

• Managerial accounting information is measured in economic, physical, and financial terms.

Answer: C

Explanation: The value-added principle means that management accountants are free to engage in any information gathering and reporting activity so long as the activity adds value in excess of its cost.

Difficulty: 1 Easy

Topic: Regulation

Learning Objective: 01-01 Distinguish between managerial and financial accounting.

Bloom's: Remember

AACSB: Knowledge Application

AICPA: FN Decision Making; BB Industry

8) Which of the following costs would be classified as a direct cost for a company that produces motorcycles?

• Rent of manufacturing facility that produces motorcycles.
• Seats used in the motorcycles.
• Wages of motorcycle assembly workers.
• Both seats used in the motorcycles and wages of motorcycle assembly workers are correct.

Answer: D

Explanation: Direct costs can be traced to a specific product. The costs of the seats used in the motorcycles and wages of motorcycle assembly workers are direct costs. An indirect cost cannot be easily or economically traced to a specific product. The rent of the manufacturing facility that produces motorcycles is an indirect cost.

Difficulty: 2 Medium

Topic: Manufacturing Product Costs on Financial Statements

Learning Objective: 01-03 Show how manufacturing product costs affect financial statements.

Bloom's: Understand

AACSB: Knowledge Application

AICPA: BB Industry; FN Measurement