Chapter 1 Managerial Accounting and the Business Environment
j j j j j j j
True/FalsejQuestions
1. Althoughjfinancialjandjmanagerialjaccountingjdifferjinjmanyjways,jtheyjarejsimilarjinjthatj
bothjrelyjonjthejsamejunderlyingjfinancialjdata.
Answer:jTruej j Level:jMediumj j LO:j1
2. Managerialjaccountingjisjajbranchjofjfinancialjaccountingjandjservesjessentiallyjthejsa
mejpurposesjasjfinancialjaccounting.
Answer:jFalsej j Level:jMediumj j LO:j1
3. Managerialjaccountingjplacesjgreaterjemphasisjonjthejfuturejthanjfinancialjac
counting,jwhichjisjprimarilyjconcernedjwithjthejpast.
Answer:jTruej j Level:jEasyj j LO:j1
4. Managerialjaccountingjisjnotjneededjinjajnon-profitjorjgovernmentaljorganization.
Answer:jFalsej j Level:jEasyj j LO:j1
5. Whenjcarryingjoutjtheirjplanningjactivities,jmanagersjselectjajcoursejofjactionjandjspe
cifyjhowjthejactionjwilljbejimplemented.
Answer:jTruej j Level:jEasyj j LO:j2
6. Whenjcarryingjoutjtheirjplanningjactivities,jmanagersjobtainjfeedbackjtojensurejthatjthejp
lanjisjactuallyjcarriedjoutjandjisjappropriatelyjmodifiedjasjcircumstancesjchange.
Answer:jFalsej j Level:jMediumj j LO:j2
7. Thejcontrollerjoccupiesjajlinejpositionjinjanjorganization.
Answer:jFalsej j Level:jEasyj j LO:j2
8. Decentralizationjmeansjthejdelegationjofjdecision-
makingjauthorityjthroughoutjanjorganizationjbyjallowingjmanagersjatjvariousjoperatingj
levelsjtojmakejkeyjdecisionsjrelatingjtojtheirjownjareajofjresponsibility.
Answer:jTruej j Level:jEasyj j LO:j2
Garrison,jManagerialjAccounting,j12thjEdition 3
,Chapter 1 Managerial Accounting and the Business Environment
j j j j j j j
9. Ajfirm'sjorganizationjchartjwilljnormallyjshowjbothjthejformaljandjinformaljlinesjofjrepo
rtingjandjcommunication.
Answer:jFalsej j Level:jEasyj j LO:j2
10. ThejChiefjFinancialjOfficerjofjanjorganizationjisjresponsiblejforjensuringjthatjlinejope
rationsjrunjsmoothly.
Answer:jFalsej j Level:jMediumj j LO:j2
11. Traditionally,jcompaniesjhavejmaintainedjlargejamountsjofjrawjmaterials,jworkjinjproces
s,jandjfinishedjgoodsjinventoriesjtojactjasjbuffersjsojthatjoperationsjcanjproceedjsmoothlyje
venjifjtherejarejunanticipatedjdisruptions.
Answer:jTruej j Level:jMediumj j LO:j3
12. ProcessjReengineeringjisjgenerallyjconsideredjtojbejajmorejradicaljapproachjtojim
provementjthanjTotaljQualityjManagement.
Answer:jTruej j Level:jEasyj j LO:j3
13. ProcessjReengineeringjemphasizesjajteamjapproachjinvolvingjfront-
linejworkers,jwhereasjTotaljQualityjManagementjisjusuallyjimplementedjusingjoutsidej
specialistsjandjisjimposedjfromjabove.
Answer:jFalsej j Level:jMediumj j LO:j3
14. Ifjethicaljstandardsjwerejnotjgenerallyjfollowed,jonejofjthejresultsjwouldjprobablyjbejfew
erjgoodsjandjservicesjavailablejinjthejmarketplace.
Answer:jTruej j Level:jMediumj j LO:j4
15. ThejStandardsjofjEthicaljConductjforjManagementjAccountantsjpromulgatedjbyjthejInsti
tutejofjManagementjAccountantsjspecificallyjstatejthatjmanagementjaccountants'jsolejet
hicaljresponsibilityjisjtojnotjbreakjanyjlaws.
Answer:jFalsej j Level:jEasyj j LO:j4
4 Garrison,jManagerialjAccounting,j12thjEdition
,Chapter 1 Managerial Accounting and the Business Environment
j j j j j j j
MultiplejChoicejQuestions
16. Managementjaccountingjfocusesjprimarilyjonjprovidingjdatajfor:
A) internaljusesjbyjmanagers.
B) externaljusesjbyjstockholdersjandjcreditors.
C) externaljusesjbyjthejInternaljRevenuejService.
D) externaljusesjbyjthejSecuritiesjandjExchangejCommission.
Answer:jAj j Level:jEasyj j LO:j1
17. Managerialjaccounting:
A) isjmorejfuturejorientedjthanjfinancialjaccounting.
B) tendsjtojsummarizejinformationjmorejthanjfinancialjaccounting
C) isjprimarilyjconcernedjwithjprovidingjinformationjtojexternaljusers.
D) isjmorejconcernedjwithjprecisionjthanjtimeliness.
Answer:jAj j Level:jEasyj j LO:j1
18. Comparedjtojfinancialjaccounting,jmanagerialjaccountingjplacesjmorejemphasisjon:
A) thejflexibilityjofjinformation.
B) thejprecisionjofjinformation.
C) thejtimelinessjofjinformation.
D) bothjAjandjCjabove.
Answer:jDj j Level:jEasyj j LO:j1
19. Thejfunctionjofjmanagementjthatjcomparesjplannedjresultsjtojactualjresultsjisjknownjas:
A) planning.
B) directingjandjmotivating.
C) controlling.
D) decisionjmaking.
Answer:jCj j Level:jEasyj j LO:j2
20. Whichjofjthejfunctionsjofjmanagementjinvolvesjoverseeingjday-to-dayjactivities?
A) Planning
B) Directingjandjmotivating
C) Controlling
D) Decisionjmaking
Answer:jBj j Level:jEasyj j LO:j2
Garrison,jManagerialjAccounting,j12thjEdition 5
, Chapter 1 Managerial Accounting and the Business Environment
j j j j j j j
21. Whichjofjthejfollowingjisjnotjonejofjthejthreejbasicjactivitiesjofjajmanager?
A) Planning
B) Controlling
C) Directingjandjmotivating
D) Compilingjmanagementjaccountingjreportsj
Answer:jDj Level:jEasyj LO:j2
22. Thejdelegationjofjdecisionjmakingjtojlowerjlevelsjinjanjorganizationjisjknownjas:
A) thejplanningjandjcontroljcycle.
B) controlling.
C) decentralization.
D) nonejofjthese.
Answer:jCj j Level:jEasyj j LO:j2
23. Whichjofjthejfollowingjstatementsjarejfalsejconcerningjlinejandjstaffjfunctions?
I. Personsjoccupyingjstaffjfunctionsjhavejauthorityjoverjpersonsjoccupyingjlinejfu
nctions.
II. Bothjlinejandjstaffjfunctionsjarejdepictedjonjthejorganizationjchart.
III. Linejfunctionsjarejdirectlyjrelatedjtojthejbasicjobjectivesjofjanjorganization.
A) OnlyjI
B) OnlyjII
C) OnlyjIjandjII
D) I,jII,jandjIII
Answer:jAj j Level:jMediumj j LO:j2
24. Whichjofjfollowingjwouldjnormallyjbejfoundjonjajmanufacturingjcompany'sjorg
anizationjchart?
A) thejlayoutjofjthejfactoryjassemblyjlines
B) ajlistjofjthejmaterialsjneededjtojproducejeachjofjthejcompany'sjproducts
C) thejinformaljlinesjofjreportingjandjcommunication
D) nonejofjthejabove
Answer:jDj j Level:jEasyj j LO:j2
6 Garrison,jManagerialjAccounting,j12thjEdition
j j j j j j j
True/FalsejQuestions
1. Althoughjfinancialjandjmanagerialjaccountingjdifferjinjmanyjways,jtheyjarejsimilarjinjthatj
bothjrelyjonjthejsamejunderlyingjfinancialjdata.
Answer:jTruej j Level:jMediumj j LO:j1
2. Managerialjaccountingjisjajbranchjofjfinancialjaccountingjandjservesjessentiallyjthejsa
mejpurposesjasjfinancialjaccounting.
Answer:jFalsej j Level:jMediumj j LO:j1
3. Managerialjaccountingjplacesjgreaterjemphasisjonjthejfuturejthanjfinancialjac
counting,jwhichjisjprimarilyjconcernedjwithjthejpast.
Answer:jTruej j Level:jEasyj j LO:j1
4. Managerialjaccountingjisjnotjneededjinjajnon-profitjorjgovernmentaljorganization.
Answer:jFalsej j Level:jEasyj j LO:j1
5. Whenjcarryingjoutjtheirjplanningjactivities,jmanagersjselectjajcoursejofjactionjandjspe
cifyjhowjthejactionjwilljbejimplemented.
Answer:jTruej j Level:jEasyj j LO:j2
6. Whenjcarryingjoutjtheirjplanningjactivities,jmanagersjobtainjfeedbackjtojensurejthatjthejp
lanjisjactuallyjcarriedjoutjandjisjappropriatelyjmodifiedjasjcircumstancesjchange.
Answer:jFalsej j Level:jMediumj j LO:j2
7. Thejcontrollerjoccupiesjajlinejpositionjinjanjorganization.
Answer:jFalsej j Level:jEasyj j LO:j2
8. Decentralizationjmeansjthejdelegationjofjdecision-
makingjauthorityjthroughoutjanjorganizationjbyjallowingjmanagersjatjvariousjoperatingj
levelsjtojmakejkeyjdecisionsjrelatingjtojtheirjownjareajofjresponsibility.
Answer:jTruej j Level:jEasyj j LO:j2
Garrison,jManagerialjAccounting,j12thjEdition 3
,Chapter 1 Managerial Accounting and the Business Environment
j j j j j j j
9. Ajfirm'sjorganizationjchartjwilljnormallyjshowjbothjthejformaljandjinformaljlinesjofjrepo
rtingjandjcommunication.
Answer:jFalsej j Level:jEasyj j LO:j2
10. ThejChiefjFinancialjOfficerjofjanjorganizationjisjresponsiblejforjensuringjthatjlinejope
rationsjrunjsmoothly.
Answer:jFalsej j Level:jMediumj j LO:j2
11. Traditionally,jcompaniesjhavejmaintainedjlargejamountsjofjrawjmaterials,jworkjinjproces
s,jandjfinishedjgoodsjinventoriesjtojactjasjbuffersjsojthatjoperationsjcanjproceedjsmoothlyje
venjifjtherejarejunanticipatedjdisruptions.
Answer:jTruej j Level:jMediumj j LO:j3
12. ProcessjReengineeringjisjgenerallyjconsideredjtojbejajmorejradicaljapproachjtojim
provementjthanjTotaljQualityjManagement.
Answer:jTruej j Level:jEasyj j LO:j3
13. ProcessjReengineeringjemphasizesjajteamjapproachjinvolvingjfront-
linejworkers,jwhereasjTotaljQualityjManagementjisjusuallyjimplementedjusingjoutsidej
specialistsjandjisjimposedjfromjabove.
Answer:jFalsej j Level:jMediumj j LO:j3
14. Ifjethicaljstandardsjwerejnotjgenerallyjfollowed,jonejofjthejresultsjwouldjprobablyjbejfew
erjgoodsjandjservicesjavailablejinjthejmarketplace.
Answer:jTruej j Level:jMediumj j LO:j4
15. ThejStandardsjofjEthicaljConductjforjManagementjAccountantsjpromulgatedjbyjthejInsti
tutejofjManagementjAccountantsjspecificallyjstatejthatjmanagementjaccountants'jsolejet
hicaljresponsibilityjisjtojnotjbreakjanyjlaws.
Answer:jFalsej j Level:jEasyj j LO:j4
4 Garrison,jManagerialjAccounting,j12thjEdition
,Chapter 1 Managerial Accounting and the Business Environment
j j j j j j j
MultiplejChoicejQuestions
16. Managementjaccountingjfocusesjprimarilyjonjprovidingjdatajfor:
A) internaljusesjbyjmanagers.
B) externaljusesjbyjstockholdersjandjcreditors.
C) externaljusesjbyjthejInternaljRevenuejService.
D) externaljusesjbyjthejSecuritiesjandjExchangejCommission.
Answer:jAj j Level:jEasyj j LO:j1
17. Managerialjaccounting:
A) isjmorejfuturejorientedjthanjfinancialjaccounting.
B) tendsjtojsummarizejinformationjmorejthanjfinancialjaccounting
C) isjprimarilyjconcernedjwithjprovidingjinformationjtojexternaljusers.
D) isjmorejconcernedjwithjprecisionjthanjtimeliness.
Answer:jAj j Level:jEasyj j LO:j1
18. Comparedjtojfinancialjaccounting,jmanagerialjaccountingjplacesjmorejemphasisjon:
A) thejflexibilityjofjinformation.
B) thejprecisionjofjinformation.
C) thejtimelinessjofjinformation.
D) bothjAjandjCjabove.
Answer:jDj j Level:jEasyj j LO:j1
19. Thejfunctionjofjmanagementjthatjcomparesjplannedjresultsjtojactualjresultsjisjknownjas:
A) planning.
B) directingjandjmotivating.
C) controlling.
D) decisionjmaking.
Answer:jCj j Level:jEasyj j LO:j2
20. Whichjofjthejfunctionsjofjmanagementjinvolvesjoverseeingjday-to-dayjactivities?
A) Planning
B) Directingjandjmotivating
C) Controlling
D) Decisionjmaking
Answer:jBj j Level:jEasyj j LO:j2
Garrison,jManagerialjAccounting,j12thjEdition 5
, Chapter 1 Managerial Accounting and the Business Environment
j j j j j j j
21. Whichjofjthejfollowingjisjnotjonejofjthejthreejbasicjactivitiesjofjajmanager?
A) Planning
B) Controlling
C) Directingjandjmotivating
D) Compilingjmanagementjaccountingjreportsj
Answer:jDj Level:jEasyj LO:j2
22. Thejdelegationjofjdecisionjmakingjtojlowerjlevelsjinjanjorganizationjisjknownjas:
A) thejplanningjandjcontroljcycle.
B) controlling.
C) decentralization.
D) nonejofjthese.
Answer:jCj j Level:jEasyj j LO:j2
23. Whichjofjthejfollowingjstatementsjarejfalsejconcerningjlinejandjstaffjfunctions?
I. Personsjoccupyingjstaffjfunctionsjhavejauthorityjoverjpersonsjoccupyingjlinejfu
nctions.
II. Bothjlinejandjstaffjfunctionsjarejdepictedjonjthejorganizationjchart.
III. Linejfunctionsjarejdirectlyjrelatedjtojthejbasicjobjectivesjofjanjorganization.
A) OnlyjI
B) OnlyjII
C) OnlyjIjandjII
D) I,jII,jandjIII
Answer:jAj j Level:jMediumj j LO:j2
24. Whichjofjfollowingjwouldjnormallyjbejfoundjonjajmanufacturingjcompany'sjorg
anizationjchart?
A) thejlayoutjofjthejfactoryjassemblyjlines
B) ajlistjofjthejmaterialsjneededjtojproducejeachjofjthejcompany'sjproducts
C) thejinformaljlinesjofjreportingjandjcommunication
D) nonejofjthejabove
Answer:jDj j Level:jEasyj j LO:j2
6 Garrison,jManagerialjAccounting,j12thjEdition
