Chapter 1 Managerial Accounting and the Business Environment
n n n n n n n
True/FalsenQuestions
1. Althoughn financialn and n managerialn accountingn differn innmanyn ways,ntheynaren similarn inn t
hat n bothn relyn onn then samen underlyingn financialn data.
Answer:n Truen n Level:n Mediumn n LO:n 1
2. Managerialn accountingn isn an branchn of n financialn accountingn andnservesn essentiallyn thens
amen purposesn asn financialn accounting.
Answer:n Falsen n Level:n Mediumn n LO:n 1
3. Managerialn accountingn placesn greatern emphasisn onn then futuren thann financialn
accounting,n whichn isn primarilyn concerned n withn then past.
Answer:n Truen n Level:n Easyn n LO:n 1
4. Managerialn accountingn isn not n needed n inn an non-profit n orn governmentaln organization.
Answer:n Falsen n Level:n Easyn n LO:n 1
5. Whenn carryingn out n theirn planningn activities,n managersn select n an coursen ofnactionn andns
pecifyn how n then actionn willn ben implemented.
Answer:n Truen n Level:n Easyn n LO:n 2
6. Whenn carryingn out n theirn planningn activities,n managersn obtainn feedbackn tonensuren thatn th
en plann isn actuallyn carried n out n and n isn appropriatelyn modified n asn circumstancesn change.
Answer:n Falsen n Level:n Mediumn n LO:n 2
7. Then controllern occupiesn an linen positionn inn ann organization.
Answer:n Falsen n Level:n Easyn n LO:n 2
8. Decentralizationn meansn then delegationn of n decision-
makingn authorityn throughout n ann organizationn byn allowingn managersn at n variousn operati
ngn levelsn ton maken keyn decisionsn relatingn ton theirn ownn arean of n responsibility.
Answer:n Truen n Level:n Easyn n LO:n 2
Garrison,nManagerial n Accounting,n12thnEdition 3
,Chapter 1 Managerial Accounting and the Business Environment
n n n n n n n
9. An firm'sn organizationn chart n willn normallyn shown bothnthenformaln and ninformaln linesn of nr
eportingn and n communication.
Answer:n Falsen n Level:n Easyn n LO:n 2
10. Then Chief n Financialn Officern of nannorganizationn isn responsiblen forn ensuringn that nlineno
perationsn runn smoothly.
Answer:n Falsen n Level:n Mediumn n LO:n 2
11. Traditionally,n companiesn haven maintained n largen amountsn of n raw n materials,n workn inn proc
ess,n and n finished ngoodsn inventoriesn tonact nasn buffersn son that noperationsncann proceedn smoo
thlyn evenn if n theren aren unanticipated n disruptions.
Answer:n Truen n Level:n Mediumn n LO:n 3
12. Processn Reengineeringn isn generallyn considered n ton ben anmoren radicaln approachn ton i
mprovement n thann Totaln Qualityn Management.
Answer:n Truen n Level:n Easyn n LO:n 3
13. Processn Reengineeringn emphasizesn an teamn approachn involvingn front-
linen workers,n whereasn Totaln Qualityn Management n isn usuallyn implemented n usingn outsi
den specialistsn and n isn imposed n fromn above.
Answer:n Falsen n Level:n Mediumn n LO:n 3
14. If n ethicaln standardsnweren notngenerallyn followed,nonenof nthenresultsn wouldnprobablyn ben f
ewern goodsn and n servicesn availablen inn then marketplace.
Answer:n Truen n Level:n Mediumn n LO:n 4
15. Then Standardsn of nEthicaln Conductn forn Management n Accountantsn promulgated n byn then I
nstituten of nManagement n Accountantsnspecificallyn statenthat nmanagement n accountants'n s
olen ethicaln responsibilityn isn ton not n breakn anyn laws.
Answer:n Falsen n Level:n Easyn n LO:n 4
4 Garrison,nManagerial n Accounting,n12thnEdition
,Chapter 1 Managerial Accounting and the Business Environment
n n n n n n n
MultiplenChoicenQuestions
16. Management n accountingn focusesn primarilyn onn providingn datan for:
A) internaln usesn byn managers.
B) externaln usesn byn stockholdersn and n creditors.
C) externaln usesn byn then Internaln Revenuen Service.
D) externaln usesn byn then Securitiesn and n Exchangen Commission.
Answer:n A n n Level:n Easyn n LO:n 1
17. Managerialn accounting:
A) isn moren futuren oriented n thann financialn accounting.
B) tendsn ton summarizen informationn moren thann financialn accounting
C) isn primarilyn concerned n withn providingn informationn ton externaln users.
D) isn moren concerned n withn precisionn thann timeliness.
Answer:n A n n Level:n Easyn n LO:n 1
18. Compared n ton financialn accounting,n managerialn accountingn placesn moren emphasisn on:
A) then flexibilityn of n information.
B) then precisionn of n information.
C) then timelinessn of n information.
D) bothn An and n Cn above.
Answer:n D n n Level:n Easyn n LO:n 1
19. Then functionn of n management n that ncomparesn planned nresultsn tonactualn resultsn isn knownna
s:
A) planning.
B) directingn and n motivating.
C) controlling.
D) decisionn making.
Answer:n Cn n Level:n Easyn n LO:n 2
20. Whichn of n then functionsn of n management n involvesn overseeingn day-to-dayn activities?
A) Planning
B) Directingn and n motivating
C) Controlling
D) Decisionn making
Answer:n Bn n Level:n Easyn n LO:n 2
Garrison,nManagerial n Accounting,n12thnEdition 5
, Chapter 1 Managerial Accounting and the Business Environment
n n n n n n n
21. Whichn of n then followingn isn not n onen of n then threen basicn activitiesn of n an manager?
A) Planning
B) Controlling
C) Directingn and n motivating
D) Compilingnmanagement naccountingnreportsn
Answer:n D n Level:n Easyn LO:n 2
22. Then delegationn of n decisionn makingn ton lowern levelsn inn ann organizationn isn knownn as:
A) then planningn and n controln cycle.
B) controlling.
C) decentralization.
D) nonen of n these.
Answer:n Cn n Level:n Easyn n LO:n 2
23. Whichn of n then followingn statementsn aren falsen concerningn linen and n staff n functions?
I. Personsn occupyingn staff n functionsn havenauthoritynovernpersonsn occupyingn linenf
unctions.
II. Bothn linen and n staff n functionsn aren depicted n onn then organizationn chart.
III. Linen functionsn aren directlyn related n ton then basicn objectivesn of n ann organization.
A) Onlyn I
B) Onlyn II
C) Onlyn I n and n II
D) I,n II,n and n III
Answer:n A n n Level:n Mediumn n LO:n 2
24. Whichn of n followingn wouldn normallyn ben foundn onn an manufacturingn company'sn
organizationn chart?
A) then layout n of n then factoryn assemblyn lines
B) an list n of n then materialsn needed n ton producen eachn of n then company'sn products
C) then informaln linesn of n reportingn and n communication
D) nonen of n then above
Answer:n D n n Level:n Easyn n LO:n 2
6 Garrison,nManagerial n Accounting,n12thnEdition
n n n n n n n
True/FalsenQuestions
1. Althoughn financialn and n managerialn accountingn differn innmanyn ways,ntheynaren similarn inn t
hat n bothn relyn onn then samen underlyingn financialn data.
Answer:n Truen n Level:n Mediumn n LO:n 1
2. Managerialn accountingn isn an branchn of n financialn accountingn andnservesn essentiallyn thens
amen purposesn asn financialn accounting.
Answer:n Falsen n Level:n Mediumn n LO:n 1
3. Managerialn accountingn placesn greatern emphasisn onn then futuren thann financialn
accounting,n whichn isn primarilyn concerned n withn then past.
Answer:n Truen n Level:n Easyn n LO:n 1
4. Managerialn accountingn isn not n needed n inn an non-profit n orn governmentaln organization.
Answer:n Falsen n Level:n Easyn n LO:n 1
5. Whenn carryingn out n theirn planningn activities,n managersn select n an coursen ofnactionn andns
pecifyn how n then actionn willn ben implemented.
Answer:n Truen n Level:n Easyn n LO:n 2
6. Whenn carryingn out n theirn planningn activities,n managersn obtainn feedbackn tonensuren thatn th
en plann isn actuallyn carried n out n and n isn appropriatelyn modified n asn circumstancesn change.
Answer:n Falsen n Level:n Mediumn n LO:n 2
7. Then controllern occupiesn an linen positionn inn ann organization.
Answer:n Falsen n Level:n Easyn n LO:n 2
8. Decentralizationn meansn then delegationn of n decision-
makingn authorityn throughout n ann organizationn byn allowingn managersn at n variousn operati
ngn levelsn ton maken keyn decisionsn relatingn ton theirn ownn arean of n responsibility.
Answer:n Truen n Level:n Easyn n LO:n 2
Garrison,nManagerial n Accounting,n12thnEdition 3
,Chapter 1 Managerial Accounting and the Business Environment
n n n n n n n
9. An firm'sn organizationn chart n willn normallyn shown bothnthenformaln and ninformaln linesn of nr
eportingn and n communication.
Answer:n Falsen n Level:n Easyn n LO:n 2
10. Then Chief n Financialn Officern of nannorganizationn isn responsiblen forn ensuringn that nlineno
perationsn runn smoothly.
Answer:n Falsen n Level:n Mediumn n LO:n 2
11. Traditionally,n companiesn haven maintained n largen amountsn of n raw n materials,n workn inn proc
ess,n and n finished ngoodsn inventoriesn tonact nasn buffersn son that noperationsncann proceedn smoo
thlyn evenn if n theren aren unanticipated n disruptions.
Answer:n Truen n Level:n Mediumn n LO:n 3
12. Processn Reengineeringn isn generallyn considered n ton ben anmoren radicaln approachn ton i
mprovement n thann Totaln Qualityn Management.
Answer:n Truen n Level:n Easyn n LO:n 3
13. Processn Reengineeringn emphasizesn an teamn approachn involvingn front-
linen workers,n whereasn Totaln Qualityn Management n isn usuallyn implemented n usingn outsi
den specialistsn and n isn imposed n fromn above.
Answer:n Falsen n Level:n Mediumn n LO:n 3
14. If n ethicaln standardsnweren notngenerallyn followed,nonenof nthenresultsn wouldnprobablyn ben f
ewern goodsn and n servicesn availablen inn then marketplace.
Answer:n Truen n Level:n Mediumn n LO:n 4
15. Then Standardsn of nEthicaln Conductn forn Management n Accountantsn promulgated n byn then I
nstituten of nManagement n Accountantsnspecificallyn statenthat nmanagement n accountants'n s
olen ethicaln responsibilityn isn ton not n breakn anyn laws.
Answer:n Falsen n Level:n Easyn n LO:n 4
4 Garrison,nManagerial n Accounting,n12thnEdition
,Chapter 1 Managerial Accounting and the Business Environment
n n n n n n n
MultiplenChoicenQuestions
16. Management n accountingn focusesn primarilyn onn providingn datan for:
A) internaln usesn byn managers.
B) externaln usesn byn stockholdersn and n creditors.
C) externaln usesn byn then Internaln Revenuen Service.
D) externaln usesn byn then Securitiesn and n Exchangen Commission.
Answer:n A n n Level:n Easyn n LO:n 1
17. Managerialn accounting:
A) isn moren futuren oriented n thann financialn accounting.
B) tendsn ton summarizen informationn moren thann financialn accounting
C) isn primarilyn concerned n withn providingn informationn ton externaln users.
D) isn moren concerned n withn precisionn thann timeliness.
Answer:n A n n Level:n Easyn n LO:n 1
18. Compared n ton financialn accounting,n managerialn accountingn placesn moren emphasisn on:
A) then flexibilityn of n information.
B) then precisionn of n information.
C) then timelinessn of n information.
D) bothn An and n Cn above.
Answer:n D n n Level:n Easyn n LO:n 1
19. Then functionn of n management n that ncomparesn planned nresultsn tonactualn resultsn isn knownna
s:
A) planning.
B) directingn and n motivating.
C) controlling.
D) decisionn making.
Answer:n Cn n Level:n Easyn n LO:n 2
20. Whichn of n then functionsn of n management n involvesn overseeingn day-to-dayn activities?
A) Planning
B) Directingn and n motivating
C) Controlling
D) Decisionn making
Answer:n Bn n Level:n Easyn n LO:n 2
Garrison,nManagerial n Accounting,n12thnEdition 5
, Chapter 1 Managerial Accounting and the Business Environment
n n n n n n n
21. Whichn of n then followingn isn not n onen of n then threen basicn activitiesn of n an manager?
A) Planning
B) Controlling
C) Directingn and n motivating
D) Compilingnmanagement naccountingnreportsn
Answer:n D n Level:n Easyn LO:n 2
22. Then delegationn of n decisionn makingn ton lowern levelsn inn ann organizationn isn knownn as:
A) then planningn and n controln cycle.
B) controlling.
C) decentralization.
D) nonen of n these.
Answer:n Cn n Level:n Easyn n LO:n 2
23. Whichn of n then followingn statementsn aren falsen concerningn linen and n staff n functions?
I. Personsn occupyingn staff n functionsn havenauthoritynovernpersonsn occupyingn linenf
unctions.
II. Bothn linen and n staff n functionsn aren depicted n onn then organizationn chart.
III. Linen functionsn aren directlyn related n ton then basicn objectivesn of n ann organization.
A) Onlyn I
B) Onlyn II
C) Onlyn I n and n II
D) I,n II,n and n III
Answer:n A n n Level:n Mediumn n LO:n 2
24. Whichn of n followingn wouldn normallyn ben foundn onn an manufacturingn company'sn
organizationn chart?
A) then layout n of n then factoryn assemblyn lines
B) an list n of n then materialsn needed n ton producen eachn of n then company'sn products
C) then informaln linesn of n reportingn and n communication
D) nonen of n then above
Answer:n D n n Level:n Easyn n LO:n 2
6 Garrison,nManagerial n Accounting,n12thnEdition
