Managerial Accounting; Chapter 1 Notes; Exam 1 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Managers' Responsibilities
answer
Decision making; Planning, directing, controlling.
question
Planning Definition
answer
Setting Goals and objectives and how to achieve them; budget.
question
Example of Planning
answer
Generate more sales via opening new stores.
question
Example of Planning
answer
Reduce labor costs by reducing store hours.
question
Directing Definition
answer
Overseeing company's day-to-day operations.
question
Example of directing
answer
Using daily/weekly sales reports to adjust marketing strategies.
question
Example of directing
answer
Using product cost reports to adjust raw material usage.
question
Controlling Definition
answer
Evaluating results of operations against plans and making adjustments as needed.
question
Example of Controlling
answer
Comparing budgeted sales with actual sales to take corrective actions.
question
Example of Controlling
answer
Comparing budgeted product costs against actual product costs to take corrective actions.
question
Managerial Accounting
answer
Primary users: Internal users such as managers.
question
Managerial Accounting
answer
Purpose of the information: To help managers plan, direct, and control business operations and make business decisions.
question
Managerial Accounting
answer
Primary accounting product: Any internal accounting report deemed worthwhile by management.
question
Managerial Accounting
answer
Included in the report/how it must be informed: Management determines what it wants in a report, and how it wants it formatted. Reports are prepared only when management believes the benefit of using the report exceeds the cost of preparing the report.
question
Managerial Accounting
answer
Underlying basis of the information: While some information is based on past transactions, managerial accounting focuses on the future. It provides information on both external and internal transactions.
question
Managerial Accounting
answer
Information characteristic emphasized: The data must be relevant.
question
Managerial Accounting
answer
Business "unit" the report is about: Segments of the business, such as products, costumers, geographical regions, departments, and divisions.
question
Managerial Accounting
answer
When reports are done: It depends on managements needs. Some reports are prepared daily, while others may be prepared only one time.
question
Managerial Accounting
answer
Who verifies the information: There are no independent audits. However, the company's internal audit function may examine the procedures used in preparing the reports.
question
Managerial Accounting
answer
If information is required by an outside group/ government agency: No authorities body requires managerial accounting reports.
question
Managerial Accounting
answer
How reports will affect employee behavior: Management carefully considers behavioral implications when designing the managerial accounting system.
question
Financial Accounting
answer
Primary users: External users, such as creditors, stockholders, and government regulators.
question
Financial Accounting
answer
Purpose of the information: To help external users make investing and leading decisions.
question
Financial Accounting
answer
Primary accountant product: Financial statements.
question
Financial Accounting
answer
Included in the report/how it must be informed: Generally Accepted Accounting Principles (GAAP) determine the content and format of financial statements.
question
Financial Accounting
answer
Underlying basis of the information: The information is based on historical transactions with external parties.
question
Financial Accounting
answer
Information characteristic emphasized: The data must be reliable and objective.
question
Financial Accounting
answer
Business "unit" the report is about: The company as a whole (consolidated financial statements). Limited segment data is provided in the footnotes.
question
Financial Accounting
answer
When reports are done: annually and quarterly.
question
Financial Accounting
answer
Who verifies the information: Independent certified public accountants (CPAs) audit the annual financial statements of publicly traded companies and express an opinion on the fairness of financial information they contain.
question
Financial Accounting
answer
If information is required by an outside group/ government agency: Yes, the Securities and Exchange Commission (SEC) requires publicly traded companies to issue annual audited financial statements.
question
Financial Accounting
answer
How reports will affect employee behavior: The concern is about adequacy of disclosure; behavioral implications are secondary.
question
Board of Directors is on top of
answer
The Chief Executive Officer (CEO).
question
The CEO is on top of
answer
The CFO and the COO.
question
The COO is on top of
answer
The Vice President of various operations.
question
The CFO is on top of
answer
The Treasurer and the Controller.
question
The Internal Audit must report to the
answer
CFO and CEO and the Audit Committee.
question
The Audit Committee must report to the
answer
Board of Directors.
question
Changing Roles of Management Accountants
answer
Impact of technology.
question
Changing Roles of Management Accountants
answer
Ensuring accurate financial records.
question
Changing Roles of Management Accountants
answer
Planning, analyzing, and interpreting accounting data.
question
Changing Roles of Management Accountants
answer
Providing decision support.
question
Required skills of Managerial Accountants
answer
Analytical, Microsoft Excel, Written and Verbal Communications, Accounting Knowledge, Business Knowledge, and Ability to work on a team.
question
Institute of Management Accountants (IMA)
answer
Professional association for management accountants.
question
IMA functions
answer
Certification (CMA), forum research, practice development, education, knowledge sharing.
question
Management accountants must comply with four (4) ethical standards
answer
Competence, confidentiality, integrity, and credibility.
question
Definition of Ethical Behavior
answer
Means doing the right thing, regardless of consequences.
question
Examples of UNETHICAL Behavior
answer
Allowing reimbursement of false expense reports.
question
Examples of UNETHICAL Behavior
answer
Manipulating income.
question
Steps to resolve Ethical Behavior
answer
Follow company's policies for reporting unethical behavior. OR Discuss with immediate supervisor, objective adviser, consult and attorney.
question
Unethical vs. Illegal
answer
Not all unethical behavior is illegal, but all illegal behavior is unethical.
question
Unethical behavior includes:
answer
Dishonesty, unfairness, lack of objectivity, irresponsibility.
question
Sarbanes-Oxley Act of 2002 (SOX)
answer
Restore trust in publicly traded corporations, management, financial statements, and auditors.
question
Sarbanes-Oxley Act of 2002 (SOX)
answer
CEO/CFO requirements: financial statements, internal control structure, and annual assessment.
question
Sarbanes-Oxley Act of 2002 (SOX)
answer
Independent audit committee.
question
Sarbanes-Oxley Act of 2002 (SOX)
answer
Increases white-collar crime penalties.
question
International Financial Reporting Standards (IFRS)
answer
Results of globalization; Consistent reporting standards needed worldwide and SEC is studying IFRS.
question
Extensible Business Reporting Language (XBRL)
answer
Standardized tagging system for financial reports.
question
Extensible Business Reporting Language (XBRL)
answer
Advantages: decreases retrieval time, decreases conversion time, facilities comparisons, customizes information, and more consistent use of financial terminology.
question
Sustainablility and Managerial Accounting
answer
Sustainability, social responsibility, triple bottom line (profit, people, and planet).
question
Shifting Economy
answer
Shift away form manufacturing toward service and managerial accounting has expanded.
question
Competing in Global Marketplace
answer
Barriers to international trade have fallen and more accurate and timely information needed.
question
Advanced Information Systems
answer
Enterprise resource planning (ERP), lean production, Just-In-Time (JIT), and Total quality management (TQM).
question
Enterprise resource planning
answer
System that integrates a company's functions, departments, and data. Advantages: streamline operations, respond quickly to changes, replace separate software systems. Disadvantages: expensive.
question
Lean Productions
answer
A philosophy and business strategy of manufacturing without waste; lower costs and increases competitive position.
question
Just-In-Time Inventory (JIT)
answer
Manufacturing 'Just in time" to fill orders; Reduces raw materials inventory, finished goods inventory, storage costs, and handling costs.
question
Total Quality Management (TQM)
answer
Goals to provide customers with superior products and services; continuously set higher goals for quality; International Organizational for Standardization (ISO)
