Lesson 1

Question 1

Managerial Accounting or Financial Accounting

the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to MANAGERS for the pursuit of an organization’s goals.

Answer 1

Managerial Accounting

Question 2

Its intended purpose is to assist users internal to the company in making well-informed business decisions.

Answer 2

Managerial Accounting

Question 3

Managerial Accounting or Financial Accounting

Techniques used are not dictated by accounting standards.

Answer 3

Managerial Accounting

Question 4

TRUE OR FALSE

The presentation of managerial accounting data can be modified to meet the specific needs of its end-user.

Answer 4

TRUE

Question 5

produces and disseminates official financial statements for public consumption that conform to prevailing accounting standards.

Answer 5

Financial Accounting

Question 6

encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics.

Answer 6

Managerial Accounting

Question 7

a large subset of managerial accounting that specifically focuses on capturing a company’s total COSTS of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Answer 7

Cost Accounting

Question 8

It must conform to certain standards, such as generally accepted accounting principles (GAAP).

Answer 8

Financial Accounting

Question 9

What are the types of managerial accounting?

Answer 9

Product Costing and Valuation.
Cash Flow Analysis.
Inventory Turnover Analysis.
Constraint Analysis.
Financial Leverage Metrics.
Accounts Receivable (AR) Management.
Budgeting, Trend Analysis, and Forecasting.,

Question 10

It deals with determining the total costs involved in the production of a good or service.

Answer 10

Product Costing

Question 11

Also known as cost-volume-profit analysis

Answer 11

Marginal Costing

Question 12

the impact on the cost of a product by adding one additional unit into production. It is useful for short-term economic decisions.

Answer 12

Marginal Costing

Question 13

flows into break-even analysis, which involves calculating the contribution margin on the sales mix to determine the unit volume at which the business’s gross sales equal total expenses.

Answer 13

Margin Analysis

Question 14

is useful for determining price points for products and services.

Answer 14

Break-even point analysis

Question 15

The reason why managerial accountants perform cash flow analysis

Answer 15

to determine the cash impact of business decisions.

Question 16

provides a more accurate picture of a company’s true financial position, it also makes it harder to see the true cash impact of a single financial transaction.

Answer 16

Accrual Accounting

Question 17

is a calculation of how many times a company has sold and replaced inventory in a given time period.

Answer 17

Inventory turnover

Question 18

the amount of expense a company incurs to store unsold items.

Answer 18

carrying cost of inventory

Question 19

Managerial accountants help determine where bottlenecks occur and calculate the impact of these CONSTRAINTS on revenue, profit, and cash flow.

Answer 19

Constraint Analysis

Question 20

refers to a company’s use of borrowed capital in order to acquire assets and increase its return on investments.

Answer 20

Financial leverage

Question 21

categorizes AR invoices by the length of time they have been outstanding.

Answer 21

Accounts Receivable Aging Report

Question 22

are extensively used as a quantitative expression of the company’s plan of operation.

Answer 22

Budgets

Question 23

the process of preparing and presenting official quarterly or annual financial information for external use.

Answer 23

Financial Accounting

Question 24

uses pro forma measures that describe and measure the financial information tracked internally by corporate managers.

Answer 24

Managerial Accounting

Question 25

Do Managerial Accountants Need to Follow GAAP?

Answer 25

No, managerial accountants are not legally obligated to follow GAAP because the documents they produce are not regulated by GAAP. These documents focus on internal company metrics that focus on company performance.

Question 26

What Types of Information Does Managerial Accounting Compute?

Answer 26

Managerial accounting is useful for companies to track and craft spending budgets, reduce costs, project sales figures, and manage cash flows, among other tasks.

Question 27

Three Pillars of Managerial Accounting

Answer 27

planning, decision-making, and controlling.

Question 28

Key Components of Managerial Accounting

Answer 28

Forecasting and Performance Tracking