8quesChap19 - ANSWERS TO QUESTIONS 1. (a) Disagree....

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19-4 ANSWERS TO QUESTIONS 1. (a) Disagree. Managerial accounting is a field of accounting that provides economic and financial information for managers and other internal users. (b) Mary is incorrect. Managerial accounting applies to all types of businesses—service, merchandising, and manufacturing. 2. (a) Financial accounting is concerned primarily with external users such as stockholders, creditors, and regulators. In contrast, managerial accounting is concerned primarily with internal users such as officers and managers. (b) Classified financial statements are the end product of financial accounting. The statements are prepared quarterly and annually. In managerial accounting, internal reports may be prepared daily, weekly, monthly, quarterly, annually, or as needed. (c) The purpose of financial accounting is to provide general-purpose information for all users. The purpose of managerial accounting is to provide special-purpose information for a particular user for a specific decision. 3. Differences in the content of the reports are as follows: Financial Managerial Pertains to business as a whole and is highly aggregated. Limited to double-entry accounting and cost data. Generally accepted accounting principles. Pertains to subunits of the business and may be very detailed. May extend beyond double-entry accounting system to any relevant data. Standard is relevance to decisions. In financial accounting, financial statements are verified annually through an independent audit by certified public accountants. There are no independent audits of internal reports issued by managerial accountants. 4. Budgets are prepared by companies to provide future direction. Because the budget is also used as an evaluation tool, some managers try to game the budgeting process by underestimating their division’s predicted performance so that it will be easier to meet their performance targets.
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This note was uploaded on 04/05/2010 for the course BUSINESS 11 taught by Professor 11 during the Spring '10 term at University of Hawaii, Manoa.

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8quesChap19 - ANSWERS TO QUESTIONS 1. (a) Disagree....

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