Managerial Accounting Exam #1 Flashcard

Managerial accounting information is intended for use by managers of the business (insiders), whereas financial accounting information is distributed to outsiders as well as to managers. These outsiders include stockbrokers, creditors, potential investors, and the general public.

Managerial accounting information is intended to assist managers in planning and controlling both the short-run and long-run activities of the business. Financial accounting information is primarily intended to present the operating results and financial position of the business entity as an aid to resource allocation decisions made by outside investors. Financial accounting information is also used for income tax purposes.

1) to help guide who has decision-making authority over company assets; 2) to produce accounting information that is useful in planning and decision making; and 3) to provide information for monitoring, evaluating, and rewarding performance.

Since management accounting information is developed for us primarily by a company's management, it need not conform to generally accepted accounting principles or any other set of prescribed standards. However, management accounting information should be developed in a manner that is relevant to the decision at hand and not mislead the decision maker.

Three inventory control accounts that might be used by a manufacturing firm are materials inventory—the cost of materials on hand; work in process inventory—the cost of unfinished product on hand; and finished goods inventory—the cost of completed product on hand.

- information is tailored to the needs of individual decision makers - emphasis is on expected future results

- the salary of the production line supervisor

..the product is sold

..paid

- enhanced management responsibility - assignment of decision-making responsibilities - coordination of activities - perfomance evaluation - decision-making - communication - motivation - evaluation

goals are set at reasonable and achievable levels

goals are set at absolute efficiency, which is more difficult if not impossible to reach

1) sales budget 2) production budget 3) direct materials budget 4) direct labor budget 5) overhead budget 6) budgeted income statement 7) budgeted balance sheet

401k defers the tax until later years.

the systematic planning for long-term investments in company assets, such as office, buildings, equipments, manufacturing plants, computers, etc.

- effects on quality of the product - effect on time of delivery to customer - government regulations - worker safety - company image - environmental concerns - the boss says so