Managerial Accounting – Test 1 – Flashcards
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Decision Making
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Identifying courses of action and choosing among them.
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Planning
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Setting goals and objectives for a company and determining how to achieve them
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Budget
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A quantitative expression of a plan.
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Directing
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Overseeing a company's day-to-day operations
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Controlling
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Evaluating the results of business operations against the plan and making adjustments
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Three Primary Responsibilities of Managers
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Planning, Directing, Controlling
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Financial Accounting
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Used by external users, such as creditors, stockholders, and federal auditors
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Managerial Accounting
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For Internal use only
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Financial Accounting
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To help users make lending and/or investing decisions
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Financial Accounting
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Content and format must adhere to GAAP
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Managerial Accounting
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Does not need to adhere to GAAP
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Financial Accounting
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Statements based on historical transactions
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Managerial Accounting
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Statements are focused on the future, with some use of past transactions. Includes both internal and external transactions
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Financial Accounting
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Data is objective and reliable
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Managerial Accounting
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Data must be relevant
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Managerial Accounting
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Used to help make internal business decisions
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CEO
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Runs the company on a daily basis
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COO
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Responsible for company's operations
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CFO
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Responsible for all of a company's financial concerns
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Controller
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Responsible for general financial accounting, managerial accounting, and tax reporting. Reports to CFO
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Treasurer
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Responsible for raising capital and investing funds
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Institute of Management Accountants
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IMA: a professional organization of managerial accountants
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Competence, Confidentiality, Credibility, Integrity
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IMA ethical standards for managerial accountants
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Sarbanes Oxley Act of 2002
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Increased the penalty for falsifying accounting information
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Enterprise Resource Planning (ERP)
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Large systems that integrate all of a business's functions, departments, and data into one system.
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Extensible Business Reporting Language (XRBL)
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...
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International Financial Reporting Standards (IFRS)
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International standards for financial reports that is replacing GAAP
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Sustainability
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The ability of meet the needs of the present without compromising the ability of future generations to meet their own needs.
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Triple Bottom Line
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People, Planet, and Profit
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Just In Time Management
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Receives materials "Just in time" to process an order, eliminates storage costs, throughput times, etc. Strives for zero defects. Lean inventory
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Lean Production
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The idea of operating without waste.
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Cost Benefit Analysis
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Weighs the expected costs of taking a course of action against the expected benefits of the action
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Total Quality Management
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Delight customers by providing them with superior products and services
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ISO 9001:2008
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Quality management standards set forth by the ISO
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Service company
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No inventory account, most of COGS comes from direct labor.
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Merchandising company
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Inventory consists of purchases and freight in costs.
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Retailer
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Purchases inventory from other companies, then sells with a mark up
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Wholesaler
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Buys products in bulk, marks up the prices, and then sells to retailers
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Manufacturing company
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Inventory consists of Raw Materials, WIP, and Finished Goods
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Raw Materials inventory
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inventory account consisting of all physical materials used in a plant
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Work-in-Process inventory
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Inventory account consisting of DM, DL, and MOH
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Finished goods inventory
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Inventory account consisting of completed goods that haven't been sold
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Cost of Goods Available for Sale
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Beginning Finished Goods Inv + COGM=
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Cost of Goods Manufactured
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DM+DL+MOH=
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Cost of Goods Sold
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COGAS - Ending FG inv=
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Value Chain
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Activities that add value to a company's products
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Research & Development
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Researching new or improved products and the processes to create them.
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Design
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Detailed engineering of products and services and the processes for producing them
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Production/Purchases
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(Step of value chain) Resources used to produce a product or service or to purchase finished merchandise intended for resale
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Marketing
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Promotion and advertising of products of services
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Distribution
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Delivery of Products or Services
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Customer Service
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Support provided for customers after the sale
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Cost Object
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Anything for which managers want a separate measurement of cost
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Direct Cost
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a cost that can be traced to the cost object
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Indirect cost
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A cost that relates to the cost object but cannot be traced to it.
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Total Costs
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the cost of all resources used throughout the value chain
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Inventoriable Product costs
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Costs only in the "Production/Purchases" stage of the value chain
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Period Costs
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All costs incurred in any other stage in the value chain
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Direct Materials
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All primary raw materials that become a physical part of the finished product
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Indirect Materials
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Materials that cannot be traced to individual units
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Direct Labor
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The cost of compensating employees who physically convert raw materials into the company's raw materials
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Indirect Labor
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The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products.
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Manufacturing Overhead
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IM+IL+MC
