ACG 2071 - Managerial Accounting

Study Probes - Chapter 1 SOLUTION

1.

Which of the following is part of planning?

A. Departmental performance report
B. Incremental analysis
C. Budgets
D. GAAP reporting

2. Which one of the following is considered part of the controlling process?

A. Measuring performance
B. Implementing plans
C. Formulating long-term budgets
D. Motivating employees
3.

Which of the following is a characteristic of managerial accounting?

A. Must comply with GAAP
B. Generates reports primarily for internal users
C. Contains monetary information only
D. Emphasizes historical transactions

4.

Which of the following statements is true?

A. Financial accounting may deviate from GAAP.
B. Managerial accounting provides information primarily for external users.
C. Managerial accounting provides more detailed information than financial
accounting does.
D. Financial accounting emphasizes future transactions.
5.
A.
B.
C.
D.

Comparing actual results to expected results is an example of:

decision making.
planning.
incremental analysis
controlling

6 .Which of the following is not part of the planning and control process?
A. Preparing financial statements.
B. Deciding whether to reward or punish managers.
C. Implementing the plan.
D. Comparing actual results to planned results.
7. Monto Manufacturing produces widgets. Which one of the following best describes a
user of managerial accounting information?
A. A materials supplier of Monto Manufacturing
B. A bank reviewing a loan application from Monto Manufacturing
C. The Internal Revenue Service requesting Montos tax return
D. A purchasing manager ordering materials for Monto Manufacturing

8.

Which of the following is not a characteristic of managerial accounting?

A. It stresses future transactions.
B. It emphasizes detailed information.
C. It applies to both service and manufacturing businesses.
D. It is required by GAAP.

9. The informational needs of internal users

a. are historical in nature
b. emphasize the company as a whole
c. emphasize accuracy over timeliness
d. do not need to comply with the rules of GAAP
10. The factors that decision makers should contemplate include:
a. quantitative factors
b. qualitative factors
c. both quantitative and qualitative factors
d. none of the above
11. Which is true?
A. Accounting information includes both quantitative and qualitative information used by
decision makers.
B. Accounting information includes only qualitative information used by decision makers.
C. Accounting information includes only quantitative information used by decision makers.
12. Smith Manufacturing is a company that just began operations. Which one of the following
best describes a user of managerial accounting information?
A. Credit Manager of a vendor for Smith Manufacturing
B. Purchasing Manager for Smith Manufacturing
C. Bank Manager reviewing a loan application from Smith Manufacturing
D. IRS Divisional Manager reviewing the tax return of Smith Manufacturing
13. When comparing managerial accounting information with financial accounting
information, it is expected that managerial accounting information would
A. be based upon GAAP.
B. emphasize information on the company as a whole.
C. present estimates of future financial operations.
D. include an analysis of historical cost.
14. What is the purpose of management accounting?
A. To analyze past accounting information
B. To provide information to internal users
C. To determine the cost of a project, service, or product
D. To determine the profitability of a company
E. All of the above.
15. Which of the following statements is true?
A. Managerial accounting must comply with GAAP.

B. Financial accounting provides information primarily for internal users.

C. Financial accounting provides more detailed information than managerial accounting
does.
D. Managerial accounting emphasizes future transactions.
16. What incident spawned a requirement for companies to assess and document their
internal control structure?
A. Establishment of GAAP
B. Development of benchmarks
C. Implementation of cash transactions
D. Tax Act of 2009
E. SOX
17. Cost information helps to
A. make pricing decisions.
B. determine the value of cost of goods sold on the income statement and inventories
on the balance sheet.
C. evaluate the efficiency and productivity of the company's board of directors.
D. A and B.
18.
A.
B.
C.
D.

Which of the following is not a characteristic of managerial accounting?

It must comply with GAAP.
It stresses future transactions.
It emphasizes detailed information.
It is aimed primarily at internal users.

19.
A.
B.
C.
D.

Which of the following is a characteristic of managerial accounting?

Must comply with GAAP
Generates reports primarily for internal users
Contains monetary information only
Emphasizes backward-looking analyses

20.
A.
B.
C.
D.

The position responsible for the planning and controlling is:

controller.
treasurer.
CFO
managerial accountants.

21. What is the purpose of managerial accounting?

A. To comply with GAAP
B. To provide information to internal users
C. To determine the cost of a project, service, or product
D. To determine the profitability of a company
E. All of the above.
22. Which of the following is not part of the value chain?
A. Correction of faulty production methods in returned products

B.
C.
D.

Acquiring materials, supplies, and services

Selling and marketing
Delivery to customers

23. Which of the following requirements did the Sarbanes-Oxley Act of 2002 create?
A. Companies must assess and document their internal control
B. More responsibility is added to the cost accountants of a company.
C. Companies must have a documented value chain.
D. A company must make sure all the steps in order to get it product or service to a
customer are implemented.
Short Answer:
Answers can be found in chapter 1. It is immensely more beneficial if you look up the
answers in the chapter as you will get more insight by reading the concept in context of
the chapter compared to if I would provide you a one sentence answer. Hence, I will not
post answers to the following. If you want confirmation of your interpretation of the
answer, feel free to ask.
1. In what way is managerial accounting more flexible than financial accounting?
2. How is a budget used in managerial accounting and under which managerial
accounting role does it fall?
3. What is a benchmark and how is it used in managerial accounting?
4. List 6 differences in managerial accounting compared to financial accounting.
5. Who are the users of managerial accounting compared to the users of financial
accounting?
6. What is the goal of managerial accounting?
7. What is planning? What is controlling?
8. What is a value chain and what are its components?
9. Who is responsible for performing managerial accounting activities?
109. What is the role of SOX as it pertains to the corporate controller?