ACC 203: Chapter 1 Flashcards
Managerial Accounting
short answer: Focuses on the financial insight needed for an organization to achieve success.
long answer: Focuses on identifying, interpreting, analyzing, and implementing the financial information internal management needs to run the company efficiently, effectively, and profitability.
Managerial Accounting is also called
Cost Accounting
What are the three primary responsibilities for managerial accountants? (Name Them and Define Them)
Planning
- Involves setting goals and objectives for the company and determining how to achieve them.
Directing:
- Overseeing the companies day-to day operations.
- Securing the resources to execute on the budget that was set in the planning process.
- Management uses sales and cost information by store, region and distribution channels to run daily business operations.
Controlling
- Evaluating the results of business operations against the plan and making adjustments to keep the company pressing toward its goals.
What are the Three Phases of Planning? (Management Function) (Name and Define Them)
Strategy
- Defines the organization and its purpose (why are we here).
- Generally includes items pertaining to the definition of core values, mission, objectives, and sustainability (newer components increasingly being added.)
Positioning
- Optimizing product/service placement in a competitive marketplace.
Budgets
- Provide detailed financial plans for the organization.
What are the three types of Budgets?
Operating budget (ongoing operations), cash budgets (payments/receipts), and capital expenditure budget
What are the three phases of Directing?(Management Function) (Name and Define Them)
Costing
- Collection, assignment, and interpretation of cost.
- Knowing and assessing cost behavior.
Production
- Focused on running a lean business: minimizing costs and maximizing efficiency, while achieving enhanced output and quality standards.
- Successful businesses use enterprise resource packages (ERP) to manage their complex operations
Analysis
- Problem solving approaches to answer the following questions: what level of production and pricing to establish, whether to accept or reject special orders, make or buy certain products/services, keep or drop a division/segment of the business, and sell “as is” or process a product further.
What are the two phases of Controlling?(Management Function)
Monitor
- Setting standards of performance.
- Performing variance analysis which looks at actual performance relative to budget/standard.
- Following up with operational personnel to identify issues/opportunities for corrective action/performance enhancement.
Balance Scorecard
- Translates organization strategic goals into a set of performance objectives that in turn, are measured monitored, and changed if necessary to ensure that strategic goals are met.
Is It Financial or Managerial Accounting?
- Reports are usually prepared quarterly and annually.
- Information is verified by external auditors.
- Focus on the past.
- Main Characteristic of information is that it must be relevant.
- Reports tend to be prepared for the parts of the org. rather than the whole org.
- Primary users are internal (ie. company managers.)
- It is governed by GAAP or IFRS.
- The primary characteristics of information are that it must be reliable and objective.
- Reports are prepared as needed.
- It is not governed by legal requirements.
- Primary users are external (ie. creditors, investors).
- Focus is on the future.
- Reporting is based mainly on the company as a whole.
- Financial
- Financial
- Financial
- Managerial
- Managerial
- Managerial
- Financial
- Financial
- Managerial
- Managerial
- Financial
- Managerial
- Financial
Specify whether the user would primarily use financial accounting information or managerial accounting information.
- Reporter From the Wall Street Journal
- Regional Division Managers
- Potential Investors
- Bookkeeping Department
- Manager of Service Department
- Wall Street Analyst
- Division Controller
- State Tax Agency Auditor
- External Auditor (Public Accounting Firm)
- Loan Officer At The Company’s Bank
- Board of Directors
- Internal Auditor
- SEC examiner
- Current Stockholders
- Financial
- Managerial
- Financial
- Both
- Managerial
- Financial
- Both
- Financial
- Financial
- Financial
- Both
- Both
- Financial
- Financial
Board of Directors (Define)
Oversee the company. Elected by stockholders of the company.
What does the Chief Executive Officer (CEO) do? (2)
- Manages the company on a daily basis.
- Hires executives to run various aspects of the org. Including the COO and CFO.
What does the Chief Operating Officer (COO) do?
Responsible for company operations, such as R&D, production, and distribution.
What does the Chief Financial Officer (CFO) do? What are the treasurer and controller responsible for?
CFO Deals with any financial concerns.
Treasurer: Responsible for raising capital through issuing stocks and bonds and investing funds.
Controller: General financial + managerial accounting, and tax reporting.
What does the Chief Information Officer (CIO) do? What does the Chief Sustainability Officer (CSO) do?
Question 1. Manage Companies’ technology infrastructure
Question 2. In charge of devising, implementing, and reporting on the company’s sustainability initiatives.
Audit Committee
Oversees the internal audit function AWA the annual audit of the financial statements by independent CPAs.
Internal Audit Function
Ensures that the company’s internal controls and risk management policies are functioning properly. (Reports to Audit Committee)
What is The Institute of Management Accountants (IMA)? What is its vision?
- A professional organization that promotes the advancement of the management accounting profession.
- Issues the CMA certification.
Its vision is to be the leading resource for developing, certifying, connecting, and supporting accountants and financial professionals who work within companies and organizations.
Four Step Process for Resolving Ethical Dilemmas
- Understand the ethical decision you face.
- Specify the option for alternative courses of action.
- Identify the impact of each option on the stakeholders (owners, BOD, management, employees, consumers, creditors, companies brand, and the public in general)
- Choose the alternative that is the most ethical and that you would be proud to have reported in the news.
Not all unethical behaviour is ______, but all illegal behaviour is _________.
Illegal, Unethical
The IMA’s overarching ethical principles include the following (4):
Honesty, Objectivity, Fairness, Responsibility
The IMA’s ethical standards include the following (4):
Competence, Integrity, Confidentiality, Credibility
What is an ERP system? Two examples of ERP Systems?
ERP systems like SAP and ORACLE gather company data into a centralized data warehouse, which then feeds the data into software for all the company’s business activities from budgeting and purchasing to production and customer service.
What are the advantages of ERP Systems? (4)
- Streamlines operations
- Saves money
- Help companies respond quickly to changes
- Make software/technological infrastructure more simple.
What is sustainability?
The ability of a system to maintain its own viability, endure without giving way or use resources so that they are not depleted or permanently damaged.
