ACC 203: Chapter 1

Question 1

Managerial Accounting

Answer 1

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.

Question 2

Managerial Accounting is also called

Answer 2

Cost Accounting

Question 3

What are the three primary responsibilities for managerial accountants? (Name Them and Define Them)

Answer 3

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.

Question 4

What are the Three Phases of Planning? (Management Function) (Name and Define Them)

Answer 4

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.

Question 5

What are the three types of Budgets?

Answer 5

Operating budget (ongoing operations), cash budgets (payments/receipts), and capital expenditure budget

Question 6

What are the three phases of Directing?(Management Function) (Name and Define Them)

Answer 6

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.

Question 7

What are the two phases of Controlling?(Management Function)

Answer 7

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.

Question 8

Is It Financial or Managerial Accounting?

1. Reports are usually prepared quarterly and annually.
2. Information is verified by external auditors.
3. Focus on the past.
4. Main Characteristic of information is that it must be relevant.
5. Reports tend to be prepared for the parts of the org. rather than the whole org.
6. Primary users are internal (ie. company managers.)
7. It is governed by GAAP or IFRS.
8. The primary characteristics of information are that it must be reliable and objective.
9. Reports are prepared as needed.
10. It is not governed by legal requirements.
11. Primary users are external (ie. creditors, investors).
12. Focus is on the future.
13. Reporting is based mainly on the company as a whole.

Answer 8

1. Financial
2. Financial
3. Financial
4. Managerial
5. Managerial
6. Managerial
7. Financial
8. Financial
9. Managerial
10. Managerial
11. Financial
12. Managerial
13. Financial

Question 9

Specify whether the user would primarily use financial accounting information or managerial accounting information.

1. Reporter From the Wall Street Journal
2. Regional Division Managers
3. Potential Investors
4. Bookkeeping Department
5. Manager of Service Department
6. Wall Street Analyst
7. Division Controller
8. State Tax Agency Auditor
9. External Auditor (Public Accounting Firm)
10. Loan Officer At The Company’s Bank
11. Board of Directors
12. Internal Auditor
13. SEC examiner
14. Current Stockholders

Answer 9

1. Financial
2. Managerial
3. Financial
4. Both
5. Managerial
6. Financial
7. Both
8. Financial
9. Financial
10. Financial
11. Both
12. Both
13. Financial
14. Financial

Question 10

Board of Directors (Define)

Answer 10

Oversee the company. Elected by stockholders of the company.

Question 11

What does the Chief Executive Officer (CEO) do? (2)

Answer 11

• Manages the company on a daily basis.
• Hires executives to run various aspects of the org. Including the COO and CFO.

Question 12

What does the Chief Operating Officer (COO) do?

Answer 12

Responsible for company operations, such as R&D, production, and distribution.

Question 13

What does the Chief Financial Officer (CFO) do? What are the treasurer and controller responsible for?

Answer 13

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.

Question 14

What does the Chief Information Officer (CIO) do? What does the Chief Sustainability Officer (CSO) do?

Answer 14

Question 1. Manage Companies’ technology infrastructure
Question 2. In charge of devising, implementing, and reporting on the company’s sustainability initiatives.

Question 15

Audit Committee

Answer 15

Oversees the internal audit function AWA the annual audit of the financial statements by independent CPAs.

Question 16

Internal Audit Function

Answer 16

Ensures that the company’s internal controls and risk management policies are functioning properly. (Reports to Audit Committee)

Question 17

What is The Institute of Management Accountants (IMA)? What is its vision?

Answer 17

• 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.

Question 18

Four Step Process for Resolving Ethical Dilemmas

Answer 18

1. Understand the ethical decision you face.
2. Specify the option for alternative courses of action.
3. Identify the impact of each option on the stakeholders (owners, BOD, management, employees, consumers, creditors, companies brand, and the public in general)
4. Choose the alternative that is the most ethical and that you would be proud to have reported in the news.

Question 19

Not all unethical behaviour is ______, but all illegal behaviour is _________.

Answer 19

Illegal, Unethical

Question 20

The IMA’s overarching ethical principles include the following (4):

Answer 20

Honesty, Objectivity, Fairness, Responsibility

Question 21

The IMA’s ethical standards include the following (4):

Answer 21

Competence, Integrity, Confidentiality, Credibility

Question 22

What is an ERP system? Two examples of ERP Systems?

Answer 22

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.

Question 23

What are the advantages of ERP Systems? (4)

Answer 23

• Streamlines operations
• Saves money
• Help companies respond quickly to changes
• Make software/technological infrastructure more simple.

Question 24

What is sustainability?

Answer 24

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.

Question 25

What is the Triple Bottom Line?

Answer 25

People, Planet, Profit

Question 26

What is Corporate Social Responsibility (CSR)?

Answer 26

It is a business model that helps a company communicate its social and environmental impact.

Question 27

What is the purpose of the Sarbanes-Oxley Act of 2002? What does it do?

Answer 27

Question 1: To restore trust in publicly traded corporations, their management, their financial statements, and auditors.
Question 2: Enhances internal control and financial reporting requirements and establishes regulatory requirements for publically traded companies and their independent auditors.

Question 28

Who is responsible for the company’s financial statements and disclosures, and for establishing/maintaining an adequate internal control structure and procedures for financial reporting?

Answer 28

CEO and CFO

Question 29

What are the globalization implications for management accounting?

Answer 29

• Need more accurate and timely information
• Need to be aware of regulations and laws in the countries where they do business
• New management techniques from international competitors

Question 30

What are the globalization implications for management accounting?

Answer 30

Need more accurate and timely information
Need to be aware of regulations and laws in the countries where they do business
New management techniques from international competitors

Question 31

What are the three pillars of sustainability?

Answer 31

Environment, Social, Economic

Question 32

What skills should management accountants possess?

Answer 32

Need both technical skills (such as managerial and financial accounting knowledge and technology skills), and nontechnical skills (such as ethics, communication, critical thinking, and leadership).