Cost Accounting Chapter 1 – Flashcards
Unlock all answers in this set
Unlock answersquestion
measures, analyzes, and reports financial and nonfinancial information to help managers make decisions to fulfill organizational goals. Management accounting need not be GAAP compliant.
answer
management accounting
question
focuses on reporting to external users including investors, creditors, banks, suppliers, and governmental agencies. Financial statements must be based on GAAP.
answer
financial accounting
question
are used to record economic events and transactions such as sales and the purchases of materials and then process the data into a format that is helpful for managers and others
answer
accounting systems
question
measures, analyzes and reports financial and nonfinancial information related to the costs of acquiring or using resources in an organization.
answer
cost accounting
question
T/F Today, most accounting professionals take the position that cost information is part of management accounting; therefore, the distinction between the two is not clear-cut and in this book, we often use the terms interchangeably.
answer
True
question
Purpose of info: help managers make decisions to fulfill an org's goal
answer
management accounting
question
Purpose of info: communicate org's financial position investor, bankers or regulators
answer
financial accounting
question
primary users: managers of the org
answer
management accounting
question
primary users: external users
answer
financial accounting
question
focus: future-oriented
answer
management accounting
question
focus: post-oriented
answer
financial accounting
question
rules of reporting: does not have to follow GAAP, but are based on cost-benefit analysis
answer
management accounting
question
rules of reporting: must follow GAAP, and be certified by external, independent auditors.
answer
financial accounting
question
time span: could be hourly to 20 years/focused: departments
answer
management accounting
question
time span: annually or quarterly financial reports/focused: company as a whole
answer
financial accounting
question
behavioral implications: designed to influence the behaviors of managers and employees
answer
management accounting
question
behavioral implications: primarily reports economic events, but also influences behavior because often times managers compensation is dependent on financial results
answer
financial accounting
question
specifies how an organization matches its own capabilities with the opportunities in the marketplace.
answer
strategy
question
what are the two broad strategies?
answer
cost leadership or product differentiation
question
Strategy used by businesses to create a low cost of operation within their niche. The use of this strategy is primarily to gain an advantage over competitors by reducing operation costs below that of others in the same industry.
answer
cost leadership
question
the process of distinguishing a product or service from others, to make it more attractive to a particular target market
answer
product differentiation
question
describes cost management that specifically focuses on strategic issues.
answer
Strategic cost management
question
(1) their company's cost, productivity or efficiency advantage relative to competitors or (2) the premium prices a company can charge relative to the costs of adding features that make its products or services distinctive.
answer
competitive advantage
question
Who are our most important customers, and how can we be competitive and deliver value to them?
answer
management accounting strategic questions
question
What substitute products exist in the marketplace, and how do they differ from our own?
answer
management accounting strategic questions
question
What is our most critical capability?
answer
management accounting strategic questions
question
Will adequate cash be available to fund the strategy or will additional funds need to be raised?
answer
management accounting strategic questions
question
is an important part of planning and implementing strategy.
answer
creating value
question
the usefulness a customer gains from a company's product or service.
answer
value
question
determines the value a customer derives from a product.
answer
the entire customer experience
question
Customers demand much more than just a fair price - they expect quality products _______________________
answer
delivered in a timely manner
question
the sequence of business functions in which a product is made progressively more useful to customers.
answer
value chain
question
the value chain:
answer
Research & development Design of Products and Processes Production Marketing Distribution Customer service
question
(generating and experimenting with ideas related to new products, services or processes)
answer
Research & development
question
(detailed planning, engineering and testing of products and processes)
answer
Design of Products and Processes
question
(procuring, transporting and storing, coordinating and assembling resources to produce a product or deliver a service)
answer
Production
question
(promoting and selling products or services)
answer
Marketing
question
(processing orders and shipping products or services to customers)
answer
Distribution
question
(providing after-sales service to customers)
answer
Customer Service
question
provides information to inform each of these functions in the value chain.
answer
Management Accounting
question
what is responsible for everything in the value chain
answer
administration
question
what else does administration include other than the value chain?
answer
accounting, human resources, information technology
question
Customers want companies to use the value chain to deliver ever-improving levels of performance when it comes to several (or even all) of the following:
answer
Cost and efficiency Quality Time Innovation Sustainability
question
understanding the activities that cause costs to arise and managing them allows managers to react to the continuous pressure to reduce costs
answer
Cost and efficiency
question
customers expect high levels of quality
answer
quality
question
two important dimensions of time are new-product development and customer-response time
answer
time
question
a constant flow of innovative products or services is the basis for the ongoing success of a company.
answer
Innovation
question
the development and implementation of strategies to achieve long-term financial, social and environmental goals.
answer
Sustainability
question
what are the five steps of decision making?
answer
Identify the problem and uncertainties. Obtain information. Make predictions about the future. Make decisions by choosing between alternatives. Implement the decision, evaluate performance, and learn.
question
Of the five steps in decision making, the first four are _________ and the fifth is ________.
answer
planning; control
question
selects goals and strategies, predicts results, decides how to attain goals, and communicates this to the organization.
answer
planning
question
the most important planning tool-is the quantitative expression of a plan of activity by management and is an aid to coordinating what needs to be done to execute that plan.
answer
budget
question
takes actions that implement the planning decision, evaluates performance, and provides feedback and learning to the organization.
answer
control
question
Three guidelines help management accountants provide the most value to the strategic and operational decision- making of their companies:
answer
cost-benefit strategy, Behavioral and technical considerations, Different Costs for Different Purposes
question
benefits of an action/purchase generally must exceed costs as a basic decision rule.
answer
Cost-benefit approach
question
people are involved in decisions, not just dollars and cents.
answer
Behavioral and technical considerations
question
Managers use alternative ways to compute costs in different decision-making situations.
answer
Different Costs for Different Purposes
question
The four standards of ethical conduct for management accountants as advanced by the Institute of Management Accountants are:
answer
Competence Confidentiality Integrity Objectivity
question
______ are the foundation of a well-functioning economy. Accountants have special ethical obligations given that they are responsible for the integrity of the financial information provided to internal and external parties.
answer
ethics
