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1 Copyright © 2021 Pearson Education, Inc.
Financial and Managerial Accounting: Financial Chapters, 7e (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) Critical thinking and judgment skills are not necessary for accountants because technology has made the activities routine.
Answer: FALSE
Explanation: Technology plays an important supporting role in performing routine accounting functions. This allows accountants to have more time to focus on reviewing and evaluating economic activities using critical thinking and judgment.
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)
5) A model called the ________ was created Horngren’s Financial & Managerial Accounting The Financial Chapters 7e Tracie Miller Nobles, Brenda Mattison (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4
2 Copyright © 2021 Pearson Education, Inc.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.
- neither accounting judgments nor economic activity.
C)economic activity only.
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 2 / 4
3 Copyright © 2021 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
- / 4
4 Copyright © 2021 Pearson Education, Inc.14) A creditor is any person who has an ownership interest in a business.
Answer: FALSE
Explanation: A creditor is any person to whom money is owed.
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
15) Managerial accounting focuses on information needed by lenders, customers, and the federal government.
Answer: FALSE
Explanation: Financial accounting focuses on providing information for external decision makers, such as lenders, customers, and the federal government.
Diff: 1
LO: F:1-1
AACSB: Interpersonal relations and teamwork
AICPA Functional: Reporting
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information
16) Any person or business to whom a business owes money is called the business's creditor.
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
17) Decision makers are looking for an international accounting language because the most significant change in the business world in the last decade has been the huge increase in international commerce.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Reporting
PE Question Type: Concept
H2: Decision Makers: The Users of Accounting Information
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