Management Services by Luzviminda S.

Payongayong
Y2006 edition
CHAPTER 1 Managerial Accounting
TRUE OR FALSE
1 0 11 1 24 1
2 1 12 0 25 1
3 0 16 0 26 0
4 1 17 0
5 0 18 0
6 0 19 1
7 0 20 0
8 0 21 1
9 1 22 1
10 1 23 1

MULTIPLE CHOICE
1 C 16 A 31 B
2 A 17 A 32 C
3 D 18 C 33 B
4 B 19 B 34 A
5 B 20 C 35 D
6 C 21 D
7 D 22 B
8 B 23 C
9 B 24 B
10 D 25 C
11 B 26 B
12 A 27 C
13 B 28 D
14 B 29 C
15 B 30 C

PROBLEMS
1.1 SEE TEXT 1.4
1 M
1.2 1.3 2 F
a FA a L 3 F
b FA b S 4 M
c MA c S 5 M
d MA d L 6 F
e FA e L 7 M
f FA f L 8 F
9 M
10 F

1.5 This problem can form the basis of an introductory discussion of the entire field of management accounting:
or refer to page 13 TO 14 of Chapter 1
in addition, the following basic distinctions of financial accounting and management accounting

1 The focus of management accounting is on helping internal users to make better decisions, whereas the
focus of financial accounting is on helping external users to make better decisions. Management accounting

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Y2006 edition
helps in making a host of decisions, including pricing, product choices, investments in equipment, making
or buying goods and services, and manager rewards.

2 GAAP affect both internal and external accounting. However, change in internal accounting is not
inhibited by GAAP. For example, if an organization wants to account for assets on the basis of replacement
costs for internal purposes, no outside agency can prohibit such accounting. This means the company
may set up several sets of records to suit to every reports the management may need for specific purpose

3 Budgets, the formal expressions of management plans, are a major feature of management accounting,
whereas they are not as prominent in financial accounting. Budgets are major devices for compelling and
disciplining management planning.

4 An important use of management accounting information is evaluation of performance, which often takes the
form of comparison of actual resulfs against budgets, providing incentive and feedback to improve future
decisions.

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 Management Services by Luzviminda S. Payongayong
Y2006 edition

gement accounting:

ment accounting

decisions, whereas the

. Management accounting

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 Management Services by Luzviminda S. Payongayong
Y2006 edition
s in equipment, making

ccounting is not
n the basis of replacement
means the company
eed for specific purpose

nagement accounting,
vices for compelling and

ance, which often takes the

back to improve future

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