Ch 1, 2 & 4 - Introduction and Institutional Background

Question 1

Is managerial accounting information used mainly by external users?

Answer 1

False

Explanation: Managerial accounting is primarily for internal users, such as company managers, to aid in decision-making and operations.

Question 2

In Germany, are financial accounting and tax accounting traditionally closely aligned, reducing the role of managerial accounting?

Answer 2

True (Government-driven,
Tax dominated) - can reduce the emphasis on managerial accounting compared to other countries

Question 3

Does financial accounting provide budgeting information to a company’s managers?

Answer 3

False

Explanation: Budgeting is typically a function of managerial accounting, not financial accounting, which focuses on external reporting.

Question 4

Are company management, equity investors (owners), and debt investors (creditors) the most important users of financial reporting for most companies?

Answer 4

True

Explanation: Financial reporting primarily serves external users like investors, creditors, and management, who rely on this information for decision-making.

Question 5

Is financial accounting backward-looking, and therefore not useful for forecasting future cash flows?

Answer 5

False

Explanation: While financial accounting looks at past performance, it can still provide useful information for forecasting future cash flows and assessing risks.

Question 6

Do supervisory boards of stock-listed companies rely on financial reporting for their decisions?

Answer 6

Yes

Boards of directors rely heavily on accurate financial reporting to assess the company’s performance and make strategic decisions.