Chapter 1 Solutions

Chapter 1 Solutions - Chapter 1 Accounting Information and...

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Chapter 1 Accounting Information and Managerial Decisions Multiple Choice 1. (LO 1 – Users of accounting information) Answer: A 2. (LO 1 – Users of accounting information) Answer: D 3. (LO 1 – Knowledge management) Answer: C 4. (LO 2 – Data and knowledge warehouses) Answer: B 5. (LO 2 – ERP systems) Answer: B 6. (LO 2 – EDI) Answer: A 7. (LO 3 – Managerial vs. financial accounting) Answer: B 8. (LO 4 – Operational planning) Answer: C 9. (LO 5 – Functional responsibilities) Answer: A 10. (LO 6 – Role of managerial accountant) Answer: D 1 - 1
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Solutions Manual 11. (LO 7 – Steps in decision making) Answer: A 12. (LO 8 – Relevant costs) Answer: B 13. (LO 8 – Sunk costs) Answer: D 14. (LO 9 – Risk in decision making) Answer: C 15. (LO 11 – Ethics) Answer: B 16. (LO 10 – Enterprise Risk Management) Answer: D 17. (LO 10 – Enterprise Risk Management) Answer B Concept Questions 18. (LO 1 – Data, information, and knowledge) Data includes items such as sales invoices, purchase orders, customer lists, and inventory records. Data are facts and figures which have not been organized and transformed into information. Information is data that has been sorted, organized, processed, and summarized. Knowledge is information that is shared and exploited so that it adds value to an organization. 19. (LO 2 – ERP and knowledge management) ERP systems provide more effective ways for organizations to gather information and disseminate knowledge to their employees. They facilitate the collection, organization, reporting, and distribution of data throughout an organization and help managers transform the data into usable knowledge for better decision making. 1 - 2
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Chapter 1: Accounting Information and Managerial Decisions 20. (LO 3 – Managerial vs. financial accounting) The primary purpose of financial accounting is the preparation of general use financial statements for use by creditors, investors, and other users outside the company. The primary purpose of managerial accounting is the generation of financial and nonfinancial information for use by managers in their decision making roles within a company. 21. (LO 4 – Strategic and operational planning) Operational planning involves the development of short-term objectives and goals. Strategic planning involves the development of long-range goals and objectives. 22. (LO 5 – Role of finance function) The finance function is responsible for managing the financial resources of the organization. Finance managers make decisions about how to raise capital as well as where and how it is invested. 23. (LO 6 – Role of the managerial accountant) Advances in accounting information systems and other changes in the past five or ten years have resulted in the automation of traditional accounting functions involving data collection, data entry, and data reporting and a corresponding shifting of those functions from managerial accountants to clerical staff. Consequently, many managerial accountants now focus on analyzing information
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Chapter 1 Solutions - Chapter 1 Accounting Information and...

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