Managerial Accounting 6e - Chapter 1 Solutions

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Chapter 1

Managerial Accounting:
Tools for Decision Making

Discussion QUESTIONS

Q1-1. Financial accounting is oriented toward external users and is concerned with general-purpose financial statements. These financial accounting statements are highly aggregated, report on relatively long time periods, are oriented toward the past, and must conform to external standards. These standards emphasize the use of objective data.

Management accounting is oriented toward internal users and is concerned with special-purpose information. This information may be aggregated or disaggregated, depending on need, and the reporting period may be long or short, depending on need. The information is oriented primarily toward the future and does
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3. Activity cost drivers are specific units of work (activities) performed to serve customers’ needs that consume costly resources.

Q1-10. Activities consume resources that cost money.

Q1-11. Top management can help to set an ethical tone in the organization by ensuring that the company has a code of ethics and demonstrating its support for the code, but more importantly by leading the organization with ethical behavior.

Q1-12. Many ethical dilemmas involve actions that are perceived to have desirable short-run consequences and highly probable undesirable long-run consequences. The ethical action is to face an undesirable situation now to avoid a worse situation later. Yet, the decision maker may prefer to believe that things will work out in the long run, be overly concerned with the consequences of not doing well in the short run, or simply not care about the future because the problem will then belong to someone else.

MINI EXERCISES

M1-13.
1. l
2. n
3. o
4. e
5. b
6. i 7. c 8. f 9. a 10. d 11. g 12. h 13. j 14. k 15. m

M1-14.
a. Management accounting
b. Financial accounting
c. Financial accounting
d. Management accounting
e. Management accounting
f. Management accounting
g. Financial accounting
h. Financial accounting
i. Financial accounting
j. Management accounting
k. Management accounting
l. Financial accounting

M1-15.
a. Strategy
b. Mission
c. Mission
d. Mission
e. Goal
f. Strategy
g. Goal
h. Strategy
i.

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