1-1 Test Bank for Davis & Davis, Managerial Accounting,
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4/e
TESTBANK
ManagerialAccounting4thEdition
ByCharles Davis Elizabeth Davis Chapter1 -13
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, 1-2 Test Bank for Davis & Davis, Managerial Accounting,
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4/e
Table Of Contents
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1. Accounting as a Tool for Management gg gg gg gg gg
2. Cost Behavior and Cost Estimation
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3. Cost-Volume-Profit Analysis and Pricing Decisions gg gg gg gg
4. Product Costs and Job Order Costing
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5. Planning and Forecasting gg gg
5A: Planning and Forecasting in a Retail Setting* (online only)
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6. Performance Evaluation: Variance Analysis gg gg gg
7. Activity-Based Costing and Activity-Based Management gg gg gg gg
8. Using Accounting Information to Make Managerial Decisions
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9. Capital Budgeting gg
10. Decentralization and Performance Evaluation gg gg gg
11. Performance Evaluation Revisited: A Balanced Approach gg gg gg gg gg
12. Financial Statement Analysis gg gg
13. Statement of Cash Flows gg gg gg
,1-3 Test Bank for Davis & Davis, Managerial Accounting,
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4/e
Chapter 1 gg
Accounting as a Tool for Management gg gg gg gg gg
CHAPTER LEARNING OBJECTIVES
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1. Define managerial accounting (Unit 1.1)
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There are several formal definitions of managerial accounting. A simple
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one is “thegeneration of relevant information to support management’s
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decision- making activities.”
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2. Describe the differences between managerial and financial
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accounting(Unit 1.1)
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Managerial accounting’s primary users are managers and decision makers
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within an organization, whereas financial accounting is aimed primarily at
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external users. Unlike GAAP that guides financial accounting, there are no
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mandated rules in managerial accounting. Managerial accounting reports
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focus on operating segments, while financial accounting statements report
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results for the organization as a whole. Managerial accounting is
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concerned more with projecting future results than reporting past results.
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Managerial information is prepared to take advantage of a window of
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opportunity, even if some accuracy must be sacrificed. Financial accounting
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information is balanced to the penny and is delivered after the end of the
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accounting period.
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3. List and describe the four functions of managers (Unit 1.1)
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Planning means setting a direction for the organization. Long-term, or
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strategic planningprovides direction for a five- to ten-year period. Short-
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term or operational planning provides more detailed guidance for the
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coming year; it translates the company’s strategy into action steps.
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Controlling is the monitoring of day-to-day operations to identify any
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problems that require corrective action. Evaluating is the process of
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comparing a particular period’s actual results to planned results, for the
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purpose of assessing managerial performance. Decision making means
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choosing between alternative courses of action.
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4. Explain how the selection of a particular business strategy
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ggdetermines theinformation that managers need to run gg gg gg gg gg gg
ggan organization effectively (Unit 1.2)
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To run a business effectively, managers need information that shows
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how well operations are meeting the organization’s strategic goals. For
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instance, if the organization’s strategy is to be a low-cost producer,
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information about product costsand cost variances will be more useful
gg gg gg gg gg gg gg gg gg gg
to managers than information about researchand development.
gg gg gg gg gg gg gg
, 1-4 Test Bank for Davis & Davis, Managerial Accounting,
gg gg gg gg gg gg gg
4/e
5. Discuss the importance of ethical behavior in managerial
gg gg gg gg gg gg gg
accounting (Unit1.3)
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Ethical behavior means knowing right from wrong and then doing the right
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thing. Manycompanies and most professional organizations have codes of
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conduct to guide employees’ actions. Acting unethically can lead to illegal
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activity and ultimately to the destruction of the firm. Furthermore, research
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has shown that a public commitment toethical behavior can lead to
gg gg gg gg gg gg gg gg gg gg gg
superior financial performance.
gg gg gg
gg gg gg gg gg gg gg
4/e
TESTBANK
ManagerialAccounting4thEdition
ByCharles Davis Elizabeth Davis Chapter1 -13
gg gg gg gg g gg g
, 1-2 Test Bank for Davis & Davis, Managerial Accounting,
gg gg gg gg gg gg gg
4/e
Table Of Contents
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1. Accounting as a Tool for Management gg gg gg gg gg
2. Cost Behavior and Cost Estimation
gg gg gg gg
3. Cost-Volume-Profit Analysis and Pricing Decisions gg gg gg gg
4. Product Costs and Job Order Costing
gg gg gg gg gg
5. Planning and Forecasting gg gg
5A: Planning and Forecasting in a Retail Setting* (online only)
gg gg gg gg gg gg gg gg gg
6. Performance Evaluation: Variance Analysis gg gg gg
7. Activity-Based Costing and Activity-Based Management gg gg gg gg
8. Using Accounting Information to Make Managerial Decisions
gg gg gg gg gg gg
9. Capital Budgeting gg
10. Decentralization and Performance Evaluation gg gg gg
11. Performance Evaluation Revisited: A Balanced Approach gg gg gg gg gg
12. Financial Statement Analysis gg gg
13. Statement of Cash Flows gg gg gg
,1-3 Test Bank for Davis & Davis, Managerial Accounting,
gg gg gg gg gg gg gg
4/e
Chapter 1 gg
Accounting as a Tool for Management gg gg gg gg gg
CHAPTER LEARNING OBJECTIVES
gg gg
1. Define managerial accounting (Unit 1.1)
gg gg gg gg
There are several formal definitions of managerial accounting. A simple
gg gg gg gg gg gg gg gg gg
one is “thegeneration of relevant information to support management’s
gg gg gg gg gg gg gg gg gg
decision- making activities.”
gg gg gg
2. Describe the differences between managerial and financial
gg gg gg gg gg gg
accounting(Unit 1.1)
gg gg
Managerial accounting’s primary users are managers and decision makers
gg gg gg gg gg gg gg gg
within an organization, whereas financial accounting is aimed primarily at
gg gg gg gg gg gg gg gg gg gg
external users. Unlike GAAP that guides financial accounting, there are no
gg gg gg gg gg gg gg gg gg gg gg
mandated rules in managerial accounting. Managerial accounting reports
gg gg gg gg gg gg gg gg
focus on operating segments, while financial accounting statements report
gg gg gg gg gg gg g gg gg
results for the organization as a whole. Managerial accounting is
gg gg gg gg gg gg gg gg gg gg
concerned more with projecting future results than reporting past results.
gg gg gg gg gg gg gg gg gg gg
Managerial information is prepared to take advantage of a window of
gg gg gg gg gg gg gg gg gg gg gg
opportunity, even if some accuracy must be sacrificed. Financial accounting
gg gg g gg gg gg gg gg gg gg
information is balanced to the penny and is delivered after the end of the
gg gg gg gg gg g g gg gg gg gg gg gg gg gg
accounting period.
gg gg
3. List and describe the four functions of managers (Unit 1.1)
gg gg gg gg gg gg gg gg gg
Planning means setting a direction for the organization. Long-term, or
gg gg gg gg gg gg gg gg gg gg
strategic planningprovides direction for a five- to ten-year period. Short-
gg gg gg gg gg gg gg gg gg gg
term or operational planning provides more detailed guidance for the
gg gg gg gg gg gg gg gg gg
coming year; it translates the company’s strategy into action steps.
gg gg gg gg gg gg gg gg gg gg
Controlling is the monitoring of day-to-day operations to identify any
gg gg gg gg gg gg gg gg gg gg
problems that require corrective action. Evaluating is the process of
gg gg gg gg gg gg gg gg gg gg
comparing a particular period’s actual results to planned results, for the
gg gg gg gg gg gg gg gg gg gg gg
purpose of assessing managerial performance. Decision making means
gg gg gg gg gg gg gg gg
choosing between alternative courses of action.
gg gg gg gg gg gg
4. Explain how the selection of a particular business strategy
gg gg gg gg gg gg gg gg
ggdetermines theinformation that managers need to run gg gg gg gg gg gg
ggan organization effectively (Unit 1.2)
gg gg gg gg
To run a business effectively, managers need information that shows
gg gg gg gg gg gg gg gg gg
how well operations are meeting the organization’s strategic goals. For
gg gg gg gg gg gg gg gg gg gg
instance, if the organization’s strategy is to be a low-cost producer,
gg gg gg gg gg gg gg gg gg gg gg
information about product costsand cost variances will be more useful
gg gg gg gg gg gg gg gg gg gg
to managers than information about researchand development.
gg gg gg gg gg gg gg
, 1-4 Test Bank for Davis & Davis, Managerial Accounting,
gg gg gg gg gg gg gg
4/e
5. Discuss the importance of ethical behavior in managerial
gg gg gg gg gg gg gg
accounting (Unit1.3)
gg gg
Ethical behavior means knowing right from wrong and then doing the right
gg gg gg gg gg gg gg gg gg gg gg
thing. Manycompanies and most professional organizations have codes of
gg gg gg gg gg gg gg gg gg
conduct to guide employees’ actions. Acting unethically can lead to illegal
gg gg gg gg gg gg gg gg gg gg gg
activity and ultimately to the destruction of the firm. Furthermore, research
gg gg gg gg gg gg gg gg gg gg gg
has shown that a public commitment toethical behavior can lead to
gg gg gg gg gg gg gg gg gg gg gg
superior financial performance.
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