Chapter 1 Managerial Accounting and the Business
#z # z #z #z #z #z
Environment
#z
True/False #zQuestions
1. Although financial and managerial accounting differ in many ways, they are similar in
that both rely on the same underlying financial data.
Answer: True Level: Medium LO: 1
2. Managerial accounting is a branch of financial accounting and serves essentially the
same purposes as financial accounting.
Answer: False Level: Medium LO: 1
3. Managerial accounting places greater emphasis on the future than financial
accounting, which is primarily concerned with the past.
Answer: True Level: Easy LO: 1
4. Managerial accounting is not needed in a non-profit or governmental organization.
Answer: False Level: Easy LO: 1
5. When carrying out their planning activities, managers select a course of action and
specify how the action will be implemented.
Answer: True Level: Easy LO: 2
6. When carrying out their planning activities, managers obtain feedback to ensure that
the plan is actually carried out and is appropriately modified as circumstances change.
Answer: False Level: Medium LO: 2
7. The controller occupies a line position in an organization.
Answer: False Level: Easy LO: 2
8. Decentralization means the delegation of decision-making authority throughout an
organization by allowing managers at various operating levels to make key decisions
relating to their own area of responsibility.
Answer: True Level: Easy LO: 2
Garrison, #zManagerial #zAccounting, #z12th 3
#zEdition
,Chapter 1 Managerial Accounting and the Business
#z # z #z #z #z #z
Environment
#z
9. A #zfirm's #zorganization #zchart #zwill #znormally #zshow #zboth #zthe #zformal #zand #zinformal
#zlines #zof #zreporting #zand #zcommunication.
Answer: #zFalse # z #z Level: #zEasy # z #z LO: #z2
10. The #zChief #zFinancial #zOfficer #zof #zan #zorganization #zis #zresponsible #zfor #zensuring
#zthat #zline #zoperations #zrun #zsmoothly.
Answer: #zFalse # z # z Level: #zMedium # z # z LO: #z2
11. Traditionally, #zcompanies #zhave #zmaintained #zlarge #zamounts #zof #zraw #zmaterials, #zwork
#zin #zprocess, #zand #zfinished #zgoods #zinventories #zto #zact #zas #zbuffers #zso #zthat #zoperations
#zcan #zproceed #zsmoothly #zeven #zif #zthere #zare #zunanticipated #zdisruptions.
Answer: #zTrue # z #z Level: #zMedium # z # z LO: #z3
12. Process #zReengineering #zis #zgenerally #zconsidered #zto #zbe #za #zmore #zradical
#zapproach #zto #zimprovement #zthan #zTotal #zQuality #zManagement.
Answer: #zTrue # z #z Level: #zEasy # z #z LO: #z3
13. Process #zReengineering #zemphasizes #za #zteam #zapproach #zinvolving #zfront-line
#zworkers, #zwhereas #zTotal #zQuality #zManagement #zis #zusually #zimplemented #zusing
#zoutside #zspecialists #zand #zis #zimposed #zfrom #zabove.
Answer: #zFalse # z # z Level: #zMedium # z # z LO: #z3
14. If #zethical #zstandards #zwere #znot #zgenerally #zfollowed, #zone #zof #zthe #zresults #zwould
#zprobably #zbe #zfewer #zgoods #zand #zservices #zavailable #zin #zthe #zmarketplace.
Answer: #zTrue # z #z Level: #zMedium # z # z LO: #z4
15. The #zStandards #zof #zEthical #zConduct #zfor #zManagement #zAccountants #zpromulgated
#zby #zthe #zInstitute #zof #zManagement #zAccountants #zspecifically #zstate #zthat #zmanagement
#zaccountants' #zsole #zethical #zresponsibility #zis #zto #znot #zbreak #zany #zlaws.
Answer: #zFalse # z #z Level: #zEasy # z #z LO: #z4
4 Garrison, #zManagerial #zAccounting, #z12th
#zEdition
,Chapter 1 Managerial Accounting and the Business
#z # z #z #z #z #z
Environment
#z
Multiple #zChoice #zQuestions
16. Management #zaccounting #zfocuses #zprimarily #zon #zproviding #zdata #zfor:
A) internal #zuses #zby #zmanagers.
B) external #zuses #zby #zstockholders #zand #zcreditors.
C) external #zuses #zby #zthe #zInternal #zRevenue #zService.
D) external #zuses #zby #zthe #zSecurities #zand #zExchange #zCommission.
Answer: #zA # z # z Level: #zEasy # z # z LO: #z1
17. Managerial #zaccounting:
A) is #zmore #zfuture #zoriented #zthan #zfinancial #zaccounting.
B) tends #zto #zsummarize #zinformation #zmore #zthan #zfinancial #zaccounting
C) is #zprimarily #zconcerned #zwith #zproviding #zinformation #zto #zexternal #zusers.
D) is #zmore #zconcerned #zwith #zprecision #zthan #ztimeliness.
Answer: #zA # z # z Level: #zEasy # z # z LO: #z1
18. Compared #zto #zfinancial #zaccounting, #zmanagerial #zaccounting #zplaces #zmore #zemphasis #zon:
A) the #zflexibility #zof #zinformation.
B) the #zprecision #zof #zinformation.
C) the #ztimeliness #zof #zinformation.
D) both #zA #zand #zC #zabove.
Answer: #zD # z # z Level: #zEasy # z # z LO: #z1
19. The #zfunction #zof #zmanagement #zthat #zcompares #zplanned #zresults #zto #zactual #zresults #zis
#zknown #zas:
A) planning.
B) directing #zand #zmotivating.
C) controlling.
D) decision #zmaking.
Answer: #zC # z # z Level: #zEasy # z # z LO: #z2
20. Which #zof #zthe #zfunctions #zof #zmanagement #zinvolves #zoverseeing #zday-to-day #zactivities?
A) Planning
B) Directing #zand #zmotivating
C) Controlling
D) Decision #zmaking
Answer: #zB # z # z Level: #zEasy # z # z LO: #z2
Garrison, #zManagerial #zAccounting, #z12th 5
#zEdition
, Chapter 1 Managerial Accounting and the Business
#z # z #z #z #z #z
Environment
#z
21. Which #zof #zthe #zfollowing #zis #znot #zone #zof #zthe #zthree #zbasic #zactivities #zof #za #zmanager?
A) Planning
B) Controlling
C) Directing #zand #zmotivating
D) Compiling #zmanagement #zaccounting
reports #zAnswer: #zD
#z # z Level: #zEasy # z LO: #z2
22. The #zdelegation #zof #zdecision #zmaking #zto #zlower #zlevels #zin #zan #zorganization #zis #zknown #zas:
A) the #zplanning #zand #zcontrol #zcycle.
B) controlling.
C) decentralization.
D) none #zof #zthese.
Answer: #zC # z # z Level: #zEasy # z # z LO: #z2
23. Which #zof #zthe #zfollowing #zstatements #zare #zfalse #zconcerning #zline #zand #zstaff #zfunctions?
I. Persons #zoccupying #zstaff #zfunctions #zhave #zauthority #zover #zpersons #zoccupying
#zline #zfunctions.
II. Both #zline #zand #zstaff #zfunctions #zare #zdepicted #zon #zthe #zorganization #zchart.
III. Line #zfunctions #zare #zdirectly #zrelated #zto #zthe #zbasic #zobjectives #zof #zan #zorganization.
A) Only #zI
B) Only #zII
C) Only #zI #zand #zII
D) I, #zII, #zand #zIII
Answer: #zA # z #z Level: #zMedium # z # z LO: #z2
24. Which #zof #zfollowing #zwould #znormally #zbe #zfound #zon #za #zmanufacturing
#zcompany's #zorganization #zchart?
A) the #zlayout #zof #zthe #zfactory #zassembly #zlines
B) a #zlist #zof #zthe #zmaterials #zneeded #zto #zproduce #zeach #zof #zthe #zcompany's #zproducts
C) the #zinformal #zlines #zof #zreporting #zand #zcommunication
D) none #zof #zthe #zabove
Answer: #zD # z # z Level: #zEasy # z # z LO: #z2
6 Garrison, #zManagerial #zAccounting, #z12th
#zEdition
#z # z #z #z #z #z
Environment
#z
True/False #zQuestions
1. Although financial and managerial accounting differ in many ways, they are similar in
that both rely on the same underlying financial data.
Answer: True Level: Medium LO: 1
2. Managerial accounting is a branch of financial accounting and serves essentially the
same purposes as financial accounting.
Answer: False Level: Medium LO: 1
3. Managerial accounting places greater emphasis on the future than financial
accounting, which is primarily concerned with the past.
Answer: True Level: Easy LO: 1
4. Managerial accounting is not needed in a non-profit or governmental organization.
Answer: False Level: Easy LO: 1
5. When carrying out their planning activities, managers select a course of action and
specify how the action will be implemented.
Answer: True Level: Easy LO: 2
6. When carrying out their planning activities, managers obtain feedback to ensure that
the plan is actually carried out and is appropriately modified as circumstances change.
Answer: False Level: Medium LO: 2
7. The controller occupies a line position in an organization.
Answer: False Level: Easy LO: 2
8. Decentralization means the delegation of decision-making authority throughout an
organization by allowing managers at various operating levels to make key decisions
relating to their own area of responsibility.
Answer: True Level: Easy LO: 2
Garrison, #zManagerial #zAccounting, #z12th 3
#zEdition
,Chapter 1 Managerial Accounting and the Business
#z # z #z #z #z #z
Environment
#z
9. A #zfirm's #zorganization #zchart #zwill #znormally #zshow #zboth #zthe #zformal #zand #zinformal
#zlines #zof #zreporting #zand #zcommunication.
Answer: #zFalse # z #z Level: #zEasy # z #z LO: #z2
10. The #zChief #zFinancial #zOfficer #zof #zan #zorganization #zis #zresponsible #zfor #zensuring
#zthat #zline #zoperations #zrun #zsmoothly.
Answer: #zFalse # z # z Level: #zMedium # z # z LO: #z2
11. Traditionally, #zcompanies #zhave #zmaintained #zlarge #zamounts #zof #zraw #zmaterials, #zwork
#zin #zprocess, #zand #zfinished #zgoods #zinventories #zto #zact #zas #zbuffers #zso #zthat #zoperations
#zcan #zproceed #zsmoothly #zeven #zif #zthere #zare #zunanticipated #zdisruptions.
Answer: #zTrue # z #z Level: #zMedium # z # z LO: #z3
12. Process #zReengineering #zis #zgenerally #zconsidered #zto #zbe #za #zmore #zradical
#zapproach #zto #zimprovement #zthan #zTotal #zQuality #zManagement.
Answer: #zTrue # z #z Level: #zEasy # z #z LO: #z3
13. Process #zReengineering #zemphasizes #za #zteam #zapproach #zinvolving #zfront-line
#zworkers, #zwhereas #zTotal #zQuality #zManagement #zis #zusually #zimplemented #zusing
#zoutside #zspecialists #zand #zis #zimposed #zfrom #zabove.
Answer: #zFalse # z # z Level: #zMedium # z # z LO: #z3
14. If #zethical #zstandards #zwere #znot #zgenerally #zfollowed, #zone #zof #zthe #zresults #zwould
#zprobably #zbe #zfewer #zgoods #zand #zservices #zavailable #zin #zthe #zmarketplace.
Answer: #zTrue # z #z Level: #zMedium # z # z LO: #z4
15. The #zStandards #zof #zEthical #zConduct #zfor #zManagement #zAccountants #zpromulgated
#zby #zthe #zInstitute #zof #zManagement #zAccountants #zspecifically #zstate #zthat #zmanagement
#zaccountants' #zsole #zethical #zresponsibility #zis #zto #znot #zbreak #zany #zlaws.
Answer: #zFalse # z #z Level: #zEasy # z #z LO: #z4
4 Garrison, #zManagerial #zAccounting, #z12th
#zEdition
,Chapter 1 Managerial Accounting and the Business
#z # z #z #z #z #z
Environment
#z
Multiple #zChoice #zQuestions
16. Management #zaccounting #zfocuses #zprimarily #zon #zproviding #zdata #zfor:
A) internal #zuses #zby #zmanagers.
B) external #zuses #zby #zstockholders #zand #zcreditors.
C) external #zuses #zby #zthe #zInternal #zRevenue #zService.
D) external #zuses #zby #zthe #zSecurities #zand #zExchange #zCommission.
Answer: #zA # z # z Level: #zEasy # z # z LO: #z1
17. Managerial #zaccounting:
A) is #zmore #zfuture #zoriented #zthan #zfinancial #zaccounting.
B) tends #zto #zsummarize #zinformation #zmore #zthan #zfinancial #zaccounting
C) is #zprimarily #zconcerned #zwith #zproviding #zinformation #zto #zexternal #zusers.
D) is #zmore #zconcerned #zwith #zprecision #zthan #ztimeliness.
Answer: #zA # z # z Level: #zEasy # z # z LO: #z1
18. Compared #zto #zfinancial #zaccounting, #zmanagerial #zaccounting #zplaces #zmore #zemphasis #zon:
A) the #zflexibility #zof #zinformation.
B) the #zprecision #zof #zinformation.
C) the #ztimeliness #zof #zinformation.
D) both #zA #zand #zC #zabove.
Answer: #zD # z # z Level: #zEasy # z # z LO: #z1
19. The #zfunction #zof #zmanagement #zthat #zcompares #zplanned #zresults #zto #zactual #zresults #zis
#zknown #zas:
A) planning.
B) directing #zand #zmotivating.
C) controlling.
D) decision #zmaking.
Answer: #zC # z # z Level: #zEasy # z # z LO: #z2
20. Which #zof #zthe #zfunctions #zof #zmanagement #zinvolves #zoverseeing #zday-to-day #zactivities?
A) Planning
B) Directing #zand #zmotivating
C) Controlling
D) Decision #zmaking
Answer: #zB # z # z Level: #zEasy # z # z LO: #z2
Garrison, #zManagerial #zAccounting, #z12th 5
#zEdition
, Chapter 1 Managerial Accounting and the Business
#z # z #z #z #z #z
Environment
#z
21. Which #zof #zthe #zfollowing #zis #znot #zone #zof #zthe #zthree #zbasic #zactivities #zof #za #zmanager?
A) Planning
B) Controlling
C) Directing #zand #zmotivating
D) Compiling #zmanagement #zaccounting
reports #zAnswer: #zD
#z # z Level: #zEasy # z LO: #z2
22. The #zdelegation #zof #zdecision #zmaking #zto #zlower #zlevels #zin #zan #zorganization #zis #zknown #zas:
A) the #zplanning #zand #zcontrol #zcycle.
B) controlling.
C) decentralization.
D) none #zof #zthese.
Answer: #zC # z # z Level: #zEasy # z # z LO: #z2
23. Which #zof #zthe #zfollowing #zstatements #zare #zfalse #zconcerning #zline #zand #zstaff #zfunctions?
I. Persons #zoccupying #zstaff #zfunctions #zhave #zauthority #zover #zpersons #zoccupying
#zline #zfunctions.
II. Both #zline #zand #zstaff #zfunctions #zare #zdepicted #zon #zthe #zorganization #zchart.
III. Line #zfunctions #zare #zdirectly #zrelated #zto #zthe #zbasic #zobjectives #zof #zan #zorganization.
A) Only #zI
B) Only #zII
C) Only #zI #zand #zII
D) I, #zII, #zand #zIII
Answer: #zA # z #z Level: #zMedium # z # z LO: #z2
24. Which #zof #zfollowing #zwould #znormally #zbe #zfound #zon #za #zmanufacturing
#zcompany's #zorganization #zchart?
A) the #zlayout #zof #zthe #zfactory #zassembly #zlines
B) a #zlist #zof #zthe #zmaterials #zneeded #zto #zproduce #zeach #zof #zthe #zcompany's #zproducts
C) the #zinformal #zlines #zof #zreporting #zand #zcommunication
D) none #zof #zthe #zabove
Answer: #zD # z # z Level: #zEasy # z # z LO: #z2
6 Garrison, #zManagerial #zAccounting, #z12th
#zEdition
