Miller-Nobles, Accounting 9e

Chapter 1: The Role of Accounting in Decision Making

Multiple choice: Choose the alternative(s) that best completes the statement or answers the question.

1. Users of management accounting information are most likely to be:

1. business managers.
2. potential investors.
3. customers.
4. creditors.

Answer: A
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

2. Which of the following are likely to be users of financial accounting information?

1. Taxing authorities
2. Potential investors
3. Creditors
4. All of the above

Answer: D
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

True/False: Write 'T' if the statement is true and 'F' if the statement is false.

3. Accounting is the information system that measures business activity, processes the data into reports and communicates the results to decision makers.

1. True
2. False

Answer: True
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

4. Outside investors would ordinarily use financial accounting information to decide whether or not to invest in a business.

1. True
2. False

Answer: True
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

5. Management accounting focuses on information for decision makers outside of the business, such as outside investors and lenders.

1. True
2. False

Answer: False
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

6. Accounting is 'the language of business'.

1. True
2. False

Answer: True
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

7. An investor is someone who lends money to a business.

1. True
2. False

Answer: False
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

8. A creditor is a party that has an ownership interest in a business.

1. True
2. False

Answer: False
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

9. Different users of financial statements (investors, creditors, tax authorities, etc.) all focus on the same parts of the financial statements for the information they need.

1. True
2. False

Answer: False
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

Short answer: Write the word or phrase that best completes each statement or answers the question.

10. How would you describe management accounting?

Answer: Management accounting focuses on information for internal decision making.
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking