Copyright 2021 Pearson Education, Inc.

1 Copyright © 2021 Pearson Education, Inc.

Horngren's Accounting: The Managerial Chapters, 13e (Miller-Nobles)

Chapter M: 1 Introduction to Managerial Accounting

Learning Objective M:1-1

1) Managerial accounting focuses on providing information for internal planning and control.

Answer: TRUE

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provides information to external stakeholders.

Answer: FALSE

Explanation: The reverse is true. Financial accounting serves external stakeholder information needs while managerial accounting serves the needs of managers and internal staff.

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA 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 representative information and focused on the past.

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA 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 GAAP.

Answer: FALSE

Explanation: Managerial accounting information is not guided by GAAP but rather by the concept of usefulness to management for decision making purposes.

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

Horngren's Accounting The Managerial Chapters 13e (Global Edition) Tracie Miller-Nobles, Brenda Mattison (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4

2 Copyright © 2021 Pearson Education, Inc.5) Financial reporting is typically much more detailed than managerial accounting.

Answer: 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

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

6) Managerial accounting provides financial statements that report results of operations, financial 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 and therefore serves the information needs of internal parties such as managers and staff.

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

7) Which of the following is a focus of managerial accounting?

• to generate a company's financial statements for tax reporting
• to provide information to business managers to assist them in controlling their businesses
• 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: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

8) Which of the following statements is true of managerial accounting?

• The external stakeholders of a company are the primary users of managerial accounting.
• Managerial accounting information is used to help managers plan, direct and control their operations.
• An external audit by an independent CPA is required for managerial accounting information.
• Managerial accounting information must comply with Generally Accepted Accounting Principles.

Answer: B

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

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3 Copyright © 2021 Pearson Education, Inc.9) Managerial accounting information for 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, direct and control operations
• its investors to make their investment decisions

Answer: C

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

10) Which of the following statements is true of financial accounting?

• It provides information to investors needed for their investment decisions.
• It provides future focused 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, directing and controlling day-to-day operations.

Answer: A

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA 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?

• providing information that managers need to make operational decisions
• providing historical data to investors and creditors
• providing summarized results of operations
• providing information to comply with laws and regulations of government bodies

Answer: A

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

12) Which of the following is the primary focus of financial accounting?

• providing information that managers need to make operational decisions
• providing summarized information on operational results to investors and creditors
• providing information to managers to assist in planning, directing and controlling operations
• providing highly detailed information on product lines, regions, and divisions

Answer: B

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1) 3 / 4

4 Copyright © 2021 Pearson Education, Inc.

13) Connie is analyzing the financial statements of MegaMart and Bullseye Company. She wants to invest in one of the companies and is trying to decide which company has the better past performance. Connie is examining ________.

• managerial accounting information
• financial accounting information
• regulatory accounting information
• organizational accounting information

Answer: B

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

14) Who is a primary user of managerial accounting information?

• investors
• company managers
• creditors
• government authorities

Answer: B

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

15) Which of the following statements is true of managerial accounting?

• It is required to follow GAAP.
• The focus is on the future.
• An external audit by an independent CPA is required for managerial accounting information.
• Summary reports are prepared primarily for the company as a whole.

Answer: B

Diff: 1

LO: M:1-1

AACSB: Application of knowledge

AICPA Functional: Reporting

PE Question Type: Concept

H2: Why Is Managerial Accounting Important? (H1)

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