Managerial Accounting Final Exam Prep

What is the purpose of Managerial Accounting?

• Reporting information to people inside the business to assist with good decisions.

• Provides focused performance in specific areas

• Reports on past financial decisions of a company

• All of the above are correct

Managerial Accounting best reports to WHOM?

• Financial investor

• Managers

• Creditors

• The IRS

Which is a SIMILARITY of Managerial and Financial Accounting?

• They both follow GAAP guidelines

• Reports information to help with future decisions

• Focuses on different parts of the business instead of the whole

• Reports on past business

What is the definition of a budget?

• A budget is a written financial plan for a business over a specific period of time, usually a year.

• A budget shows the net income of a company as well its inflows and outflows.

• A budget shows the important financial ratios that are being used.

• A budget is a written financial plan for a business over its lifetime.

Why is budgeting important?

• Allocates the amount of money that a company plans to spend on a particular activity or resource.

• It is the plan the business works to follow to achieve financial goals and success

• Allows managers to check how effective their plans and processes are as well as what resources they will need in the future.

• All of the choices outlined indicates why budgeting are important.

Planning is what oriented?

• Past oriented

• Future oriented

• Present oriented

Which is considered as the "act" function of management?

• Creating goals and budgets

• Carry out plans, hiring people, managing the daily business

• Looking at results to see if goals were met and plans need adjusting

Which are characteristics of financial accounting?

• Is mandatory, Follows GAAP, and reporting on past decisions

• Is not mandatory, Follows GAAP, reporting on future decisions

• Is mandatory but does not follow GAAP, reports on past decisions

Which outside parties would be interested in reviewing financial reports?

• SEC/IRS

• Managers

Which is considered a major area of managerial accounting?

• Planning and forcasting

• Cost and tax accounting

• Internal Auditing

• All are considered major areas