Chapter 3: Managerial Accounting, the Business Organization, and Professional Ethics – Flashcards
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chartered accountant (CA)
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In many countries, the equivalent to the CPA in the United States - independent accountants who assure the reliability of companies' financial statements.
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certified management accountant (CMA)
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The management accountant's counterpart to the CPA.
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accounting system
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A formal mechanism for gathering, organizing, and communicating information about an organization's activities.
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decision making
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Choosing among alternative courses of action designed to achieve some objective.
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scorekeeping
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The accumulation, classification, and reporting of data that help users understand and evaluate performance.
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attention directing
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Reporting and interpreting information that helps managers focus on operating problems, imperfections, inefficiencies, and opportunities.
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problem solving
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Analysis of possible courses of a cation and identification of the best course to follow.
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planning
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Setting objectives for an organization and determining how to attain them.
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control
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Implementing plans and using feedback to evaluate the attainment of objectives.
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budget
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A quantitative expression of a plan of action and an aid to coordinating and implementing the plan.
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performance reports
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Feedback provided by comparing results with plans and by highlighting variances.
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variances
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Deviations from plans.
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management by exception
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Concentrating more on areas that deviate from the plan and less on areas that conform with plans and are presumed by to running smoothly.
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generally accepted accounted principles (GAAP)
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A set of standards to which public companies' published financial statements must adhere.
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Sarbanes-Oxley Act
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A 202 law that requires top-management oversight of a company's accounting policies and procedures.
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internal controls
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Policies to protect and make the most efficient use of an organization's assets.
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Foreign Corrupt Practices Act
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A U.S. law forbidding bribery and other corrupt practices. The law also requires all publicly held companies to maintain their accounting records in reasonable detail and accuracy and have an appropriate system of internal controls.
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internal auditors
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Accountants who review and evaluate accounting systems, including their internal controls.
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management audit
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A review to determined whether managers are implementing the policies and procedures specified by top management.
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cost-benefit analysis
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Weighing estimated costs against probable benefits, the primary consideration in choosing among accounting systems and methods.
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behavioral implications
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The accounting system's effect on the behavior, specifically the decisions, of managers.
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product life cycle
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The various stages through which a product passes, from conception and development to introduction into the market to maturation and, finally, withdrawal from the market.
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value chain
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The set of business functions or activities that add value to the products and services of an organization.
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line managers
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Managers who are directly involved with making and selling the organization's products or services.
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staff managers
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Managers who are advisory to the line managers. They have no authority over line managers, but they support the line managers by providing information and advice.
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chief financial officer (CFO)
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The top executive who deals with all finance and accounting issues in an organization. The CFO generally oversees the accounting function.
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treasurer
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The executive who is concerned mainly with the company's financial matters, such as raising and managing cash.
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controller (comptroller)
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The accounting officer of an organization who deals mainly with operating matters, such as aiding management decision making.
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service organization
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Organizations that do not make or sell tangible goods but instead provide other forms of value.
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electronic commerce (e-commerce)
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Conducting business online.
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business-to-consumer (B2C)
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Electronic commerce from business to consumer.
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business-to-business (B2B)
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Electronic commerce from one business to another business.
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enterprise resource planning (ERP) systems
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Integrated information systems that support all functional areas of a company.
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extensible Business Reporting Language (XBRL)
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An XML-based accounting language that helps communicate financial information electronically.
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business process reengineering
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The fundamental rethinking and radical redesign of business processes to improve performance in areas such as cost, quality, service and speed.
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computer-aided design (CAD)
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The use of computer technology for the design of real or virtual objects.
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computer-aided manufacturing (CAM)
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The use of computer-based software tools in manufacturing or prototyping.
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computer-integrated manufacturing (CIM) systems
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Systems that use computer-aided design, computer-aided manufacturing, robots, and computer-controlled machines.
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just-in-time (JIT) philosophy
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A philosophy to eliminate waste by deducting the time products spend in the production process and eliminating the time products spend on activities that do not add value.
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lean manufacturing
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Applying continuous process improvements to eliminate waste from the entire enterprise.
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total quality management (TQM)
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An approach to quality that focuses on prevention of defects and on customer satisfaction.
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Six Sigma
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A data-driven continuous process improvement effort designed to eliminate defects and improve quality.
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ethics
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The field that deals with human conduct in relation to what is morally good and bad, right and wrong. It is the application of values to decision making. These values include honesty, fairness, responsibility, respect, and compassion.
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IMA Statement of Ethical Professional Practice
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A code of conduct developed by the Institute of Management Accountants; this code includes competence, confidentiality, integrity, and credibility.
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code of conduct
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A document specifying the ethical standards of an organization.
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