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Test Bank for Horngren's Financial and Managerial Accounting, The Managerial Chapters Eighth Edition (Global Edition) Tracie Miller-Nobles Brenda Mattison 1 / 4
1 Copyright © 2024 Pearson Education, Inc.
Financial and Managerial Accounting: Managerial Chapters, 8e (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) 2 / 4
2 Copyright © 2024 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) 3 / 4
3 Copyright © 2024 Pearson Education, Inc.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)
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)
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