Chapter 1 Managerial Accounting and the Business
@WS @ W S @WS @WS @WS @WS
Environment
@WS
True/False Questions
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, @WSManagerial @WSAccounting, @WS12th 3
@WSEdition
,Chapter 1 Managerial Accounting and the Business
@WS @ W S @WS @WS @WS @WS
Environment
@WS
9. A @WSfirm's @WSorganization @WSchart @WSwill @WSnormally @WSshow @WSboth @WSthe @WSformal
@WSand @WSinformal @WSlines @WSof @WSreporting @WSand @WScommunication.
Answer: @WSFalse @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
10. The @WSChief @WSFinancial @WSOfficer @WSof @WSan @WSorganization @WSis @WSresponsible @WSfor
@WSensuring @WSthat @WSline @WSoperations @WSrun @WSsmoothly.
Answer: @WSFalse @ W S @WS Level: @WSMedium @ W S @WS LO: @WS2
11. Traditionally, @WScompanies @WShave @WSmaintained @WSlarge @WSamounts @WSof @WSraw
@WSmaterials, @WSwork @WSin @WSprocess, @WSand @WSfinished @WSgoods @WSinventories @WSto @WSact
@WSas @WSbuffers @WSso @WSthat @WSoperations @WScan @WSproceed @WSsmoothly @WSeven @WSif @WSthere
@WSare @WSunanticipated @WSdisruptions.
Answer: @WSTrue @ W S @WS Level: @WSMedium @ W S @WS LO: @WS3
12. Process @WSReengineering @WSis @WSgenerally @WSconsidered @WSto @WSbe @WSa @WSmore
@WSradical @WSapproach @WSto @WSimprovement @WSthan @WSTotal @WSQuality
@WSManagement.
Answer: @WSTrue @ W S @WS Level: @WSEasy @ W S @WS LO: @WS3
13. Process @WSReengineering @WSemphasizes @WSa @WSteam @WSapproach @WSinvolving @WSfront-
line @WSworkers, @WSwhereas @WSTotal @WSQuality @WSManagement @WSis @WSusually
@WSimplemented @WSusing @WSoutside @WSspecialists @WSand @WSis @WSimposed @WSfrom
@WSabove.
Answer: @WSFalse @ W S @WS Level: @WSMedium @ W S @WS LO: @WS3
14. If @WSethical @WSstandards @WSwere @WSnot @WSgenerally @WSfollowed, @WSone @WSof @WSthe
@WSresults @WSwould @WSprobably @WSbe @WSfewer @WSgoods @WSand @WSservices @WSavailable @WSin
@WSthe @WSmarketplace.
Answer: @WSTrue @ W S @WS Level: @WSMedium @ W S @WS LO: @WS4
15. The @WSStandards @WSof @WSEthical @WSConduct @WSfor @WSManagement @WSAccountants
@WSpromulgated @WSby @WSthe @WSInstitute @WSof @WSManagement @WSAccountants
@WSspecifically @WSstate @WSthat @WSmanagement @WSaccountants' @WSsole @WSethical
@WSresponsibility @WSis @WSto @WSnot @WSbreak @WSany @WSlaws.
Answer: @WSFalse @ W S @WS Level: @WSEasy @ W S @WS LO: @WS4
4 Garrison, @WSManagerial @WSAccounting, @WS12th
@WSEdition
,Chapter 1 Managerial Accounting and the Business
@WS @ W S @WS @WS @WS @WS
Environment
@WS
Multiple @WSChoice @WSQuestions
16. Management @WSaccounting @WSfocuses @WSprimarily @WSon @WSproviding @WSdata @WSfor:
A) internal @WSuses @WSby @WSmanagers.
B) external @WSuses @WSby @WSstockholders @WSand @WScreditors.
C) external @WSuses @WSby @WSthe @WSInternal @WSRevenue @WSService.
D) external @WSuses @WSby @WSthe @WSSecurities @WSand @WSExchange @WSCommission.
Answer: @WSA @ W S @WS Level: @WSEasy @ W S @WS LO: @WS1
17. Managerial @WSaccounting:
A) is @WSmore @WSfuture @WSoriented @WSthan @WSfinancial @WSaccounting.
B) tends @WSto @WSsummarize @WSinformation @WSmore @WSthan @WSfinancial @WSaccounting
C) is @WSprimarily @WSconcerned @WSwith @WSproviding @WSinformation @WSto @WSexternal @WSusers.
D) is @WSmore @WSconcerned @WSwith @WSprecision @WSthan @WStimeliness.
Answer: @WSA @ W S @WS Level: @WSEasy @ W S @WS LO: @WS1
18. Compared @WSto @WSfinancial @WSaccounting, @WSmanagerial @WSaccounting @WSplaces @WSmore @WSemphasis
@WSon:
A) the @WSflexibility @WSof @WSinformation.
B) the @WSprecision @WSof @WSinformation.
C) the @WStimeliness @WSof @WSinformation.
D) both @WSA @WSand @WSC @WSabove.
Answer: @WSD @ W S @WS Level: @WSEasy @ W S @WS LO: @WS1
19. The @WSfunction @WSof @WSmanagement @WSthat @WScompares @WSplanned @WSresults @WSto
@WSactual @WSresults @WSis @WSknown @WSas:
A) planning.
B) directing @WSand @WSmotivating.
C) controlling.
D) decision @WSmaking.
Answer: @WSC @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
20. Which @WSof @WSthe @WSfunctions @WSof @WSmanagement @WSinvolves @WSoverseeing @WSday-to-day
@WSactivities?
A) Planning
B) Directing @WSand @WSmotivating
C) Controlling
D) Decision @WSmaking
Answer: @WSB @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
Garrison, @WSManagerial @WSAccounting, @WS12th 5
@WSEdition
, Chapter 1 Managerial Accounting and the Business
@WS @ W S @WS @WS @WS @WS
Environment
@WS
21. Which @WSof @WSthe @WSfollowing @WSis @WSnot @WSone @WSof @WSthe @WSthree @WSbasic @WSactivities @WSof @WSa
@WSmanager?
A) Planning
B) Controlling
C) Directing @WSand @WSmotivating
D) Compiling @WSmanagement @WSaccounting
reports @WSAnswer: @WSD
@WS @ W S Level: @WSEasy
@ W S LO: @WS2
22. The @WSdelegation @WSof @WSdecision @WSmaking @WSto @WSlower @WSlevels @WSin @WSan @WSorganization @WSis
@WSknown @WSas:
A) the @WSplanning @WSand @WScontrol @WScycle.
B) controlling.
C) decentralization.
D) none @WSof @WSthese.
Answer: @WSC @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
23. Which @WSof @WSthe @WSfollowing @WSstatements @WSare @WSfalse @WSconcerning @WSline @WSand @WSstaff
@WSfunctions?
I. Persons @WSoccupying @WSstaff @WSfunctions @WShave @WSauthority @WSover @WSpersons
@WSoccupying @WSline @WSfunctions.
II. Both @WSline @WSand @WSstaff @WSfunctions @WSare @WSdepicted @WSon @WSthe @WSorganization @WSchart.
III. Line @WSfunctions @WSare @WSdirectly @WSrelated @WSto @WSthe @WSbasic @WSobjectives @WSof @WSan
@WSorganization.
A) Only @WSI
B) Only @WSII
C) Only @WSI @WSand @WSII
D) I, @WSII, @WSand @WSIII
Answer: @WSA @ W S @WS Level: @WSMedium @ W S @WS LO: @WS2
24. Which @WSof @WSfollowing @WSwould @WSnormally @WSbe @WSfound @WSon @WSa
@WSmanufacturing @WScompany's @WSorganization @WSchart?
A) the @WSlayout @WSof @WSthe @WSfactory @WSassembly @WSlines
B) a @WSlist @WSof @WSthe @WSmaterials @WSneeded @WSto @WSproduce @WSeach @WSof @WSthe @WScompany's
@WSproducts
C) the @WSinformal @WSlines @WSof @WSreporting @WSand @WScommunication
D) none @WSof @WSthe @WSabove
Answer: @WSD @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
6 Garrison, @WSManagerial @WSAccounting, @WS12th
@WSEdition
@WS @ W S @WS @WS @WS @WS
Environment
@WS
True/False Questions
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, @WSManagerial @WSAccounting, @WS12th 3
@WSEdition
,Chapter 1 Managerial Accounting and the Business
@WS @ W S @WS @WS @WS @WS
Environment
@WS
9. A @WSfirm's @WSorganization @WSchart @WSwill @WSnormally @WSshow @WSboth @WSthe @WSformal
@WSand @WSinformal @WSlines @WSof @WSreporting @WSand @WScommunication.
Answer: @WSFalse @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
10. The @WSChief @WSFinancial @WSOfficer @WSof @WSan @WSorganization @WSis @WSresponsible @WSfor
@WSensuring @WSthat @WSline @WSoperations @WSrun @WSsmoothly.
Answer: @WSFalse @ W S @WS Level: @WSMedium @ W S @WS LO: @WS2
11. Traditionally, @WScompanies @WShave @WSmaintained @WSlarge @WSamounts @WSof @WSraw
@WSmaterials, @WSwork @WSin @WSprocess, @WSand @WSfinished @WSgoods @WSinventories @WSto @WSact
@WSas @WSbuffers @WSso @WSthat @WSoperations @WScan @WSproceed @WSsmoothly @WSeven @WSif @WSthere
@WSare @WSunanticipated @WSdisruptions.
Answer: @WSTrue @ W S @WS Level: @WSMedium @ W S @WS LO: @WS3
12. Process @WSReengineering @WSis @WSgenerally @WSconsidered @WSto @WSbe @WSa @WSmore
@WSradical @WSapproach @WSto @WSimprovement @WSthan @WSTotal @WSQuality
@WSManagement.
Answer: @WSTrue @ W S @WS Level: @WSEasy @ W S @WS LO: @WS3
13. Process @WSReengineering @WSemphasizes @WSa @WSteam @WSapproach @WSinvolving @WSfront-
line @WSworkers, @WSwhereas @WSTotal @WSQuality @WSManagement @WSis @WSusually
@WSimplemented @WSusing @WSoutside @WSspecialists @WSand @WSis @WSimposed @WSfrom
@WSabove.
Answer: @WSFalse @ W S @WS Level: @WSMedium @ W S @WS LO: @WS3
14. If @WSethical @WSstandards @WSwere @WSnot @WSgenerally @WSfollowed, @WSone @WSof @WSthe
@WSresults @WSwould @WSprobably @WSbe @WSfewer @WSgoods @WSand @WSservices @WSavailable @WSin
@WSthe @WSmarketplace.
Answer: @WSTrue @ W S @WS Level: @WSMedium @ W S @WS LO: @WS4
15. The @WSStandards @WSof @WSEthical @WSConduct @WSfor @WSManagement @WSAccountants
@WSpromulgated @WSby @WSthe @WSInstitute @WSof @WSManagement @WSAccountants
@WSspecifically @WSstate @WSthat @WSmanagement @WSaccountants' @WSsole @WSethical
@WSresponsibility @WSis @WSto @WSnot @WSbreak @WSany @WSlaws.
Answer: @WSFalse @ W S @WS Level: @WSEasy @ W S @WS LO: @WS4
4 Garrison, @WSManagerial @WSAccounting, @WS12th
@WSEdition
,Chapter 1 Managerial Accounting and the Business
@WS @ W S @WS @WS @WS @WS
Environment
@WS
Multiple @WSChoice @WSQuestions
16. Management @WSaccounting @WSfocuses @WSprimarily @WSon @WSproviding @WSdata @WSfor:
A) internal @WSuses @WSby @WSmanagers.
B) external @WSuses @WSby @WSstockholders @WSand @WScreditors.
C) external @WSuses @WSby @WSthe @WSInternal @WSRevenue @WSService.
D) external @WSuses @WSby @WSthe @WSSecurities @WSand @WSExchange @WSCommission.
Answer: @WSA @ W S @WS Level: @WSEasy @ W S @WS LO: @WS1
17. Managerial @WSaccounting:
A) is @WSmore @WSfuture @WSoriented @WSthan @WSfinancial @WSaccounting.
B) tends @WSto @WSsummarize @WSinformation @WSmore @WSthan @WSfinancial @WSaccounting
C) is @WSprimarily @WSconcerned @WSwith @WSproviding @WSinformation @WSto @WSexternal @WSusers.
D) is @WSmore @WSconcerned @WSwith @WSprecision @WSthan @WStimeliness.
Answer: @WSA @ W S @WS Level: @WSEasy @ W S @WS LO: @WS1
18. Compared @WSto @WSfinancial @WSaccounting, @WSmanagerial @WSaccounting @WSplaces @WSmore @WSemphasis
@WSon:
A) the @WSflexibility @WSof @WSinformation.
B) the @WSprecision @WSof @WSinformation.
C) the @WStimeliness @WSof @WSinformation.
D) both @WSA @WSand @WSC @WSabove.
Answer: @WSD @ W S @WS Level: @WSEasy @ W S @WS LO: @WS1
19. The @WSfunction @WSof @WSmanagement @WSthat @WScompares @WSplanned @WSresults @WSto
@WSactual @WSresults @WSis @WSknown @WSas:
A) planning.
B) directing @WSand @WSmotivating.
C) controlling.
D) decision @WSmaking.
Answer: @WSC @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
20. Which @WSof @WSthe @WSfunctions @WSof @WSmanagement @WSinvolves @WSoverseeing @WSday-to-day
@WSactivities?
A) Planning
B) Directing @WSand @WSmotivating
C) Controlling
D) Decision @WSmaking
Answer: @WSB @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
Garrison, @WSManagerial @WSAccounting, @WS12th 5
@WSEdition
, Chapter 1 Managerial Accounting and the Business
@WS @ W S @WS @WS @WS @WS
Environment
@WS
21. Which @WSof @WSthe @WSfollowing @WSis @WSnot @WSone @WSof @WSthe @WSthree @WSbasic @WSactivities @WSof @WSa
@WSmanager?
A) Planning
B) Controlling
C) Directing @WSand @WSmotivating
D) Compiling @WSmanagement @WSaccounting
reports @WSAnswer: @WSD
@WS @ W S Level: @WSEasy
@ W S LO: @WS2
22. The @WSdelegation @WSof @WSdecision @WSmaking @WSto @WSlower @WSlevels @WSin @WSan @WSorganization @WSis
@WSknown @WSas:
A) the @WSplanning @WSand @WScontrol @WScycle.
B) controlling.
C) decentralization.
D) none @WSof @WSthese.
Answer: @WSC @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
23. Which @WSof @WSthe @WSfollowing @WSstatements @WSare @WSfalse @WSconcerning @WSline @WSand @WSstaff
@WSfunctions?
I. Persons @WSoccupying @WSstaff @WSfunctions @WShave @WSauthority @WSover @WSpersons
@WSoccupying @WSline @WSfunctions.
II. Both @WSline @WSand @WSstaff @WSfunctions @WSare @WSdepicted @WSon @WSthe @WSorganization @WSchart.
III. Line @WSfunctions @WSare @WSdirectly @WSrelated @WSto @WSthe @WSbasic @WSobjectives @WSof @WSan
@WSorganization.
A) Only @WSI
B) Only @WSII
C) Only @WSI @WSand @WSII
D) I, @WSII, @WSand @WSIII
Answer: @WSA @ W S @WS Level: @WSMedium @ W S @WS LO: @WS2
24. Which @WSof @WSfollowing @WSwould @WSnormally @WSbe @WSfound @WSon @WSa
@WSmanufacturing @WScompany's @WSorganization @WSchart?
A) the @WSlayout @WSof @WSthe @WSfactory @WSassembly @WSlines
B) a @WSlist @WSof @WSthe @WSmaterials @WSneeded @WSto @WSproduce @WSeach @WSof @WSthe @WScompany's
@WSproducts
C) the @WSinformal @WSlines @WSof @WSreporting @WSand @WScommunication
D) none @WSof @WSthe @WSabove
Answer: @WSD @ W S @WS Level: @WSEasy @ W S @WS LO: @WS2
6 Garrison, @WSManagerial @WSAccounting, @WS12th
@WSEdition
