Horngren’s Cost Accounting A Managerial Emphasis 17th Global Edition by Srikant M. Datar test bank

 
Financial accounting, by contrast, provides information to external decision makers such as investors and creditors. Its purpose is to present a fair picture of the financial condition of the company. Reports are generated quarterly or annually and report on the company as a whole. The financial statements must comply with GAAP (generally accepted accounting principles). A CPA audits, or verifies, that GAAP is being followed.
Diff: 3
Objective:  1
AACSB:  Analytical thinking
 
36) Cost accounting provides information for both management accounting and financial accounting professionals. Explain.
Answer:  Cost accounting is the process of measuring, analyzing, and reporting financial and nonfinancial information related to the costs of acquiring or using resources in an organization. For example, calculating the cost of a product is a cost accounting function that meets both the financial accountant's inventory-valuation needs and the management accountant's decision-making needs such as deciding how to price products and choosing which products to promote.
Diff: 3
Objective:  1
AACSB:  Analytical thinking
 

 
37) There is an overlap or intersection between management accounting and financial accounting. Explain.
Answer:  Management accounting develops the cost information that is necessary to value inventory for the balance sheet and cost of goods sold for the income statement.  GAAP requires absorption costing.
Diff: 2
Objective:  1
AACSB:  Analytical thinking
 
38) Describe the major differences between management accounting and financial accounting for the following:  
1. Primary users
2. Focus and emphasis
3. Rules of measurement and reporting
Answer: 
1. The primary users of management accounting information are managers of the organization.  The primary users of financial accounting are external users such as investors, banks, regulators, and suppliers.
2. Management accounting is future oriented. Financial accounting is past oriented.
3. Management accounting measurement and reporting does not have to follow GAAP but are based on cost-benefit analysis.  Financial accounting measurement and reporting must be prepared in accordance with GAAP and be certified by external, independent auditors.
Diff: 3
Objective:  1
AACSB:  Analytical thinking
 
Objective 1.2
 
1) Which of the following statements concerning an organization's strategy is true?
A) Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives.
B) Cost accountants formulate strategy in an organization since they have more inputs about costs.
C) A good strategy will always overcome poor implementation.
D) Businesses usually follow one of two broad strategies: offering a quality product at a high price, or offering a unique product or service priced lower than the competition.
Answer:  A
Diff: 2
Objective:  2
AACSB:  Analytical thinking
 
2) Strategy specifies:
A) how an organization matches its own capabilities with the opportunities in the marketplace
B) standard procedures to ensure quality products
C) incremental changes for improved performance
D) the demand created for products and services
Answer:  A
Diff: 2
Objective:  2
AACSB:  Analytical thinking
 

 
3) Which of the following is NOT a concern for management accountants in formulating a strategy?
A) identifying the most important warehouse location for the distribution of goods
B) substituting products that exist in the marketplace
C) strategizing compliance with GAAP (Generally Accepted Accounting Principles)
D) maintaining adequate fixed assets available to implement the strategy
Answer:  C
Explanation:  C) This is more of a concern of financial accountants than of management accountants.
Diff: 2
Objective:  2
AACSB:  Analytical thinking
 
4) Strategy is formulated:
A) by identifying the most important customers
B) by forecasting the composition of adequate fixed assets
C) based on the qualified opinion of external auditors
D) by eliminating sunk costs
Answer:  A
Diff: 2
Objective:  2
AACSB:  Analytical thinking
 
5) In designing strategy, a company must match its opportunities in the marketplace with:
A) environmentally friendly goals
B) its resources and capabilities
C) branding opportunities
D) the requirements of credit rating agencies
Answer:  B
Diff: 2
Objective:  2