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ACCT 306 > Ch. 1 > Flashcards

Ch. 1 Flashcards

1
Q

Accounting systems are used for?

A

To record economic events and transactions such as sales and materials purchases and process the data into information helpful to managers etc

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2
Q

Processing any economic transaction means what?

A

Collecting, categorizing, summarizing and analyzing

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3
Q

Costs are collected by category such as

A

Materials, labor and shipping

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4
Q

Accounting systems also provide information found in the firms

A

Income statement

Balance sheet

Statement of cash flow

Performance reports

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5
Q

Managers use I/S, B/S, statement of cash flows and performance reports to do what?

A

Make decisions about the activities, businesses or functional areas they oversee

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6
Q

Databases

A

Stores information in a way that allows different managers to access the information they need

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7
Q

ERP system is a

A

Single database

That collects data

And

Feeds them into applications that support

A company’s business activities such as purchasing, production, distribution and sales

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8
Q

Financial accounting

A

Focuses on reporting financial

information to external parties

such as investors, gov agencies, banks and

supplies based on GAAP

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9
Q

What is the most important way for financial accounting information to affect managers decisions and actions?

A

Through compensation which is

often in part based on numbers in

financial statements

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10
Q

Management accounting

A

Process of measuring, analyzing

and reporting financial and non

financial information that helps managers make

decisions to fulfill the goals of an

organization

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11
Q

Managers use management accounting information to?

A

1) develop, communicate and

Implement strategies

2) coordinate product design, production and

marketing decisions and evaluate

a company performance

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12
Q

Which type of accounting information and reports do not have to follow a set of principles or rules?

A

Management accounting

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13
Q

What are the key questions in management accounting?

A

1) how will this info help managers do their jobs better?

2) do the benefits of producing this info exceed costs?

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14
Q

Reports are common to both management accounting and financial acct?

True or false?

A

True

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15
Q

Cost acct provides info to both what?

A

Management and financial

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16
Q

What is the process of cost accounting?

A

Measuring, analyzing and

reporting financial & non financial

info related to costs of acquiring or using

resources in an organization

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17
Q

Most accounting professionals take the perspective that cost information is a part of?

A

Management acct info collected

to make management decisions

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18
Q

Cost management

A

Describes the activities managers

undertake to use resources in a

way that increases a product’s value to

customers and achieves an organizations goals

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19
Q

Cost management is not onl about reducing costs.

True or false?

A

True

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20
Q

Costs management also includes what? To incur additional costs?

A

Making decisions

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21
Q

Information from acct systems help managers to manage costs but the info and accounting systems themselves are not ?

A

Cost management

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22
Q

A company’s strategy specifies what?

A

How the organization matches its

Own capabilities w/ opportunities

In the marketplace

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23
Q

In other words strategy describes how an organization will

A

Compete & the opportunities it’s managers seek and pursue

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24
Q

The two broad strategies are

A

1) cost leadership strategy –>

Provide quality product or

services at low prices and managing costs

2) product differentiation strategy –> generate

profits & growth bc they offer differentiated or

unique products or services that appeal to

customers and often priced higher than the

less popular product or services of competitors

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25
Q

Management accountants work closely with who to formulate what?

A

With managers in various departments to formulate strategies by providing info about sources of competitive advantage such as

1) company’s cost, productivity or efficiency

advantage relative to competitors

2) premium prices a company can charge

relative to the costs of adding features that

make its products or services distinctive

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26
Q

What is strategic cost management?

A

Describes cost management that specifically focuses on strategic issues

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27
Q

Management accounting information helps managers formulat strategy by answering the following ?’s

Page 5

A

Page 5

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28
Q

What is the value chain?

A

Sequence of business functions by which a product is made progressively more useful to customers

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29
Q

Research and development (R&D)

A

Generating and experimenting

with ideas related to new

products , services or processes

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30
Q

Design of products and processes

A

Detailed planning, engineering &

Testing of products and processes

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31
Q

Production

A

Procuring, transporting and

storing (inbound logistics) and

coordinating and assembling (operations)

resources to produce. Product or deliver a

service

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32
Q

Marketing (including sales)

A

Promotes & sells products or

Services to customers or

prospective customers

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33
Q

Distribution

A

Processing orders & shipping

Products or services to customers

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34
Q

Customer service

A

Providing after sales service to

customers

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35
Q

Administration function is included within

A

Primary functions

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36
Q

Administration function includes

A

Accounting & finance

Human resource management

Info technology &

Supports 6 primary business functions

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37
Q

Each business is essential to companies satisfying who?

A

Their customers and keeping them satisfied and loyal over time

38
Q

Customer relationship management (CRM)

A

A strategy that integrates people

and technology in all business

functions to deepen relations with customers,

partners & distributors

39
Q

Companies gain (in terms of cost, quality, &; the speed with which new products are developed)

A

If 2 or more of individual business functions of value chain work concurrently as a team

40
Q

Managers track the cost incurred in each. Value chain category

True or false?

A

True

41
Q

What is the goal of managers when tracking costs incurred in each value chain category?

A

Reduce costs and improve efficiency

42
Q

Production and distribution of the value chain is referred as the ?

A

Supply chain

43
Q

Supply chain describes

A

The flow of goods, services & info

from initial sources of materials &

services to delivery of products to consumers

regardless of whether those activities occur

in 1 organization or in multiple organizations

44
Q

Part of cost management emphasizes what?

A

Integrating & coordinating activities Across all companies in supply chain to improve their performance & reduce costs

45
Q

Customers want companies to use value chain & supply chain to deliver ever improving levels of performance when it comes to several or all of the following:

A

1) . Cost and efficiency
2) . Quality
3) . Time
4) . Innovation
5) sustainability

46
Q

1) cost and efficiency

A
  • face continuous pressure to reduce cost of products

- to calculate & manage cost of products, must understand activities that cause costs to arise

47
Q

How does management acct info help managers calculate a target cost for a product?

A

By subtracting from target price the operating income per unit of product that a company wants to earn

48
Q

How do managers achieve target cost?

A

By eliminating some activities (such as rework) and reduce costs of performing activities on all value chain functions from initial R&;D to customer service

49
Q

2) quality

A
  • total quality management (TQM) is continuously improving the quality of products and processes
50
Q

Managers who implement TQM believe what?

A

Each and every person in the value chain is responsible for delivery products and services that exceed customers expectations

51
Q

Managers use management accounting information to evaluate costs and revenue benefits of TQM initiatives

True or false?

A

True

52
Q

Using TQM, companies design products and services to meet

A

Customer needs and wants, to make these products with zero (or very few) defects and waste & to minimize inventories

53
Q

3) Time

A
  • two important dimensions: new product development time and customer response time
54
Q

New product development time

A

Is the time it takes for companies to create New products and bring them to market

55
Q

Customer response time

A

Describes the speed at which an organization responds to customer requests

56
Q

To deliver a product on time what do managers need to increase?

A

Capacity of machine to produce more output

57
Q

Management accounting info can help managers quantify

A

Costs and benefits of doing so

58
Q

4) innovation

A
  • constant flow of innovative products or services is basis of an ongoing success of company
59
Q

Who does managers rely on to evaluate alternative investment and R&D decisions?

A

Management accounting information

60
Q

5) Sustainability

A

Is the application of cost and efficiency, quality, time and innovation to promote sustainability

Which is the development & implementation of strategies to achieve long term financial, social and environmental goals

61
Q

Sustainability is important

A

1) more & more investors care
2) companies find that sustainability goals attract and inspire employees
3) customers prefer products of companies with good sustainability records and boycot companies with poor sustainability records
4) sustainability performance of firms is monitored by societ & activist nongovernmental organizations & take action when their is a violation of environmental laws which

62
Q

Who helps managers track the key success factors of their firms as well of their competitors ?

A

Management accountants

63
Q

Competitive info serves as a benchmark managers use to what?

A

Continuously improve their operations

64
Q

Decision making, planning and control: the five step decision making process

A
  1. Identify the problem and uncertainties
  2. Obtain information
  3. Make predictions about the future
  4. Make decisions by choosing among alternatives
  5. Implement the decision, evaluate performance and learn
65
Q

Steps 1-4 of the 5 step decision making process is referred to

A

Planning

66
Q

Planning

A

Consist of selecting an

organizations goals and

strategies, predicting results under various

alternative ways of achieving those goals

, deciding how to achieve desired goals and

communicating the goals and how to achieve

Ithem to the entire organization

67
Q

What is the most important planning tool when implementing strategy?

A

Budget

68
Q

Budget

A

Quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan

69
Q

Control

A

Comprises taking actions that

implement the planning decisions,

evaluating past performance and providing

feedback and learning to help

future decision making

70
Q

What are the 3 guidelines that help management accountants provide the most value to strategic & operational decision making of their companies

A
  1. Employ a cost benefit approach
  2. Five full recognition to behavioral and technical considerations
  3. Use different costs for different purposes
71
Q

When is the cost benefit approach used?

A

When managers continually face
L
resource allocation decisions such

as whether to purchase a new software

package or hire a new employee

72
Q

When should managers spend the resources?

A

If only the expected benefits to the company exceed the excepted costs

73
Q

Technical considerations helps managers make?

A

Wise economic decisions by

providing them with the desired

info in an appropriate format and at the

preferred frequency

74
Q

How do budgets have a behavioral effect?

A

By motivating and rewarding employees for achieving an organizations goals

75
Q

Line management

A

Such as production, marketing,

and distribution management is

responsible for achieving goals of the

organization

76
Q

Staff management

A

Such as a management

accountants and information

technology and human resources management

provides advice, support and assistance to line

management

77
Q

CFO (Chief financial officer)

A

Also called finance director

Responsible for overseeing the financial operations of an organization

78
Q

Controllership

A

Provides financial info for reports

to managers & shareholders and

oversees the overall operations of an

accounting system

79
Q

Treasury

A

Oversees banking & short and long term financing, investments and cash management

80
Q

Risk management

A

Manages financial risk of interest and exchange rate changes and derivatives management

81
Q

Taxation

A

Plans income, sales and international taxes

82
Q

Investor relations

A

Communicates with, responds to and interacts with shareholders

83
Q

Strategic planning

A

Defying strategy and allocating resources to implement strategy

84
Q

Controller (also called chief accounting officer))

A

Is the financial executive primarily responsible for management and financial accounting

85
Q

Management accountants must work well in

A

Cross functional teams and as a business partner

86
Q

Management accountants must raise tough questions for managers to consider especially when preparing budgets

True or false?

A

True

87
Q

Management accountants must do the following

A
  1. Management accountants must work well in Cross functional teams and as a business partner
  2. Management accountants must raise tough questions for managers to consider especially when preparing budgets
  3. They must lead & motivate people to change and be innovative
  4. They must communicate clearly, openly and candidly
  5. They must have a strong sense of integrity
88
Q

Ethics is the foundation of a well functioning

A

Economy

89
Q

Sarbanes oxley was passed inresponse to

A

Series of corporate scandals

90
Q

Sarbanes Oxley was s designed to

A

Improve internal control, corporate governance, monitoring of managers & disclosure practices of public corporations

91
Q

Part of sarbanes, CEO AND CFO must do what?

A

Certify that the financial statement fairly represent the results of their operations

92
Q

Sarbanes also authorizes PCAOB to do what?

A

Oversee, review and investigate the work of auditors

ACCT 306 (4 decks)

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