Ch 1 Flashcards
Management accounting
Measures, analyzes and reports financial and non financial
Info that helps managers make decisions to meet
Organizations goals
Financial accounting
Focuses on reporting to external parties (investors, gov,
Creditors, suppliers)
It measures and records business transactions,
Provides financial statements that follow GAAP
Cost accounting
Measures, analyzes and reports financial and nonfinancial
Info relating to costs acquiring or using resources of organization
Cost management
Describes approaches and activities of managers
To use resources to increase value to customers
And to achieve organizational goals
Strategy
How an organization will compete and manager will
Pursue objectives
Cost leadership strategy
Quality products at a low cost
Vanguard, Southwest
Product differentiation strategy
Generate profits or growth through ability to offer
Unique products or services at higher prices
Ex. Apple, Johnson and Johnson
Strategic cost management
Describes cost management that specifically focuses
On strategic issues
Value chain
Sequence of business functions where customer
usefulness Is added to products
6 primary business functions?
Research and development Design of products and processes Production Marketing Distribution Customer service
Research and development
Generating and experimenting with ideas related
To new products, services and processes
Design of products and processes
Detailed planning, engineering and testing of
Products and processes
Production
Procuring, transporting and storing, coordinating
And assembling resources to produce a product
Or deliver a service
Marketing (including sales)
Promoting and selling products or services to customers
Distribution
Processing orders and shipping products or services
To customers
Customer service
Providing after sales service to customers
What’s included in the administrative function of the value chain 4 things?
Accounting, finance, human resources management,
Information technology
Customer relationship management (CRM)
Strategy that integrates people and technology in all business
Functions to deepen relationships with customers, partners,
And distributors
Supply chain
Parts of value chain associated with producing or
Delivering a product or service
Production and distribution
Can span across many companies
Cost and efficiency (key success factor)
Managers come up with target costs based on operating
Costs and market prices of product
To be more competitive companies try to lower costs
Quality
Customers expect high levels of quality
TQM- Total Quality Management aims to improve
Operations throughout the value chain to exceed
Customer expectations
Key success factors 4?
Cost+efficiency, quality, time, innovation
5 step decision making process?
Planning (steps 1-4)
1 identify the problem and uncertainties
2 obtain info
3 make predictions about the future
4 make decisions by choosing Among alternatives
5 implement decision, evaluate performance and learn
Planning, 4?
Comprises selecting organizational goals and strategies,
Predicting results under various alternatives, deciding
How to attain desired goals, communicating goals throughout
Organization
Budget
Quantitative expression of proposed plan of action
By management
and an aid to coordinating what
Needs to be done to execute plan
Control
Taking actions that implement planning decisions,
Decide how to evaluate performance, provide feedback
And learning to help future decision making
Learning
Examining past performance and systematically
Exploring alternative ways to make better informed
Decisions in the future
Cost benefit approach
Resources should be spent if expected benefits to
The company exceed expected costs
Line management
Production, marketing, distribution management
Directly responsible for attaining goals of organization
Staff management
Management accountants, information technology and
Human resources management
Provides advice and support to line management
CFO AKA Finance director
Executive responsible for overseeing the financial
operations of organization
6 Responsibilities of CFO?
Controllership Treasury Risk Management Taxation Investor Relations Internal Audit
Controllership
Includes providing financial info to managers, shareholders
And overseeing overall operations of accounting system
Treasury
Includes banking and short and Longterm financing,
Investing and cash management
Risk management
Includes managing financial risk of interest rate and
exchange rate changes and derivative management
Taxation (CFO responsibility)
Includes income taxes, sales taxes and international tax planning
Investor relations
Includes communicating with, responding to and
interacting with shareholders
Internal audit
Reviewing and analyzing financial and other records
To attest to integrity of organizations reporting
Controller AKA Chief accounting officer, chief management accounting executive
Financial executive primarily responsible for management
Accounting and financial accounting
What are the 4 ethical responsibilities of management accountants?
Competency, confidentiality, integrity, credibility
