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TEST BANK
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Managerial Accounting 4th Edition
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By Charles Davis Elizabeth Davis Chapter 1 - 13
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Table Of Contents
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1. Accounting as a Tool for Management
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2.Cost Behavior and Cost Estimation
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3. Cost-Volume-Profit Analysis and Pricing Decisions
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4. Product Costs and Job Order Costing
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5. Planning and Forecasting
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5A: Planning and Forecasting in a Retail Setting* (online only)
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6. Performance Evaluation: Variance Analysis
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7. Activity-Based Costing and Activity-Based Management
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8. Using Accounting Information to Make Managerial Decisions
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9. Capital Budgeting
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10. Decentralization and Performance Evaluation
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11. Performance Evaluation Revisited: A Balanced Approach
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12. Financial Statement Analysis
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13. Statement of Cash Flows
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Chapter 1 m
Accounting as a Tool for Management
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CHAPTER LEARNING OBJECTIVES
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1. Define managerial accounting (Unit 1.1)
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Theremaremseveralmformalmdefinitionsmofmmanagerialmaccounting.mAmsimplemonemism“
themgenerationmofmrelevantminformationmtomsupportmmanagement’smdecision-
making mactivities.”
2. Describe the differences between managerial and financial accountin
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g (Unit 1.1)
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Managerial maccounting’smprimarymusersmaremmanagersmandmdecisionmmakersmwithinmanm
organization,mwhereasmfinancial maccounting mismaimedmprimarilymatmexternalmusers.mUnlik
emGAAPmthatmguidesmfinancial maccounting,mtheremaremnommandatedmrulesminmmanagerialm
accounting.mManagerial maccounting mreportsmfocusmonmoperating msegments,mwhilemfinanc
ialmaccounting mstatementsmreportmresultsmformthemorganizationmasmamwhole.mManagerialma
ccounting mismconcernedmmoremwithmprojecting mfuturemresultsmthanmreporting mpastmresult
s.mManagerial minformationmismpreparedmtomtakemadvantagemofmamwindowmofmopportunity,
m evenmifm somem accuracym mustm bem sacrificed.m Financial maccounting m informationm ism balance
dmtomthempennymandmismdeliveredmafter mthemendmofmthemaccounting mperiod.
3. List and describe the four functions of managers (Unit 1.1)
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Planning mmeansmsetting mamdirectionmformthemorganization.mLong-
term,mormstrategicmplanning mprovidesmdirectionmformamfive-mtomten-year mperiod.mShort-
termmormoperational mplanning mprovidesmmoremdetailedmguidancemformthemcoming myear;mit
m translatesm them company’sm strategym intom actionm steps.m Controlling m ism them monitoring m ofm
day-to-
daymoperationsmtomidentifymanymproblemsmthatmrequiremcorrectivemaction.mEvaluating mismt
hemprocessmofmcomparing mamparticular mperiod’smactualmresultsmtomplannedmresults,mformth
empurposemofmassessing mmanagerial mperformance.mDecisionmmaking mmeansmchoosing mbet
weenmalternativemcoursesmofmaction.
4. Explain how the selection of a particular business strategy determines t
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he information that managers need to run an organization effectively (U
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nit 1.2)
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Tomrunmambusinessmeffectively,mmanagersmneedminformationmthatmshowsmhowmwellmop
erationsmaremmeeting mthemorganization’smstrategicmgoals.mForminstance,mifmthemorganiz
ation’smstrategymismtombemamlow-
costmproducer,minformationmaboutmproductmcostsmandmcostmvariancesmwillmbemmoremus
efulmtommanagersmthanminformationmaboutmresearchmandmdevelopment.
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5. Discuss the importance of ethical behavior in managerial accounting (Un
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it 1.3)
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Ethical mbehavior mmeansmknowing mrightmfrommwrong mandmthenmdoing mthemrightmthing.mM
anymcompaniesmandmmostmprofessionalmorganizationsmhavemcodesmofmconductmtomguidem
employees’mactions.mActing munethicallymcanmleadmtomillegalmactivitymandmultimatelymtomth
emdestructionmofmthemfirm.mFurthermore,mresearchmhasmshownmthatmampublicmcommitme
ntmtomethicalmbehavior mcanmleadmtomsuperior mfinancial mperformance.