Chapter 1 Flashcards
What are the 6 differences b/w financial accounting and managerial accounting? Financial Accounting…
- fs. for external users, quarterly,annual reports, general purpose, pertainsto business as a whole, highly aggregated, limited to double entry and cost, GAAP
What are the 6 differences b/w financial accounting and managerial accounting? Managerial Accounting…
- internal reprots, often as needed, specificpurpose, pertains to subuntis of the business, very detailed, any relevant data, stand is relvant to decsiions
What are management’s functions?
- Planning, 2. Directing, 3. Controlling
Explain Planning
look ahead to establish objectives
Explain DIrecting
Coordinating a copmany’s diverse activities and human resources, implementing planned objectives and providign necessary incentives to motivate employees
Explain Controlling
the process of keeping the company’s activities on track
determine whether planned goals are being met, what changes are needed to get back on track
How do managers achieve control in a small company
observe, ask questions, and know how to evaluate the answers
How do managers achieve control in a large copany
use formal systems (budgets, responsiblitiy centres, performance evaluation reports)
What are shareolders
owners, manager the company indirectly thourght the BOD which they elect
What is the Board of Directors
create operating policies, select officers such as president and vice president
what is the CEO
over all responsiblitiy for managing the business, delegates responsiblities to the other officers
What are line postions
-directly involved with company’s main revenue generating activities, vice pres of opearations, president of marketing, plant managers and supervisors, production personel
What are staff positions
support lien employees, finance, legal, human resources
What is the CFO
Responsible for all accoutning and finance, supported by the controller and the reasurer
what is the controller
- maintains accoutning reocrds, 2. maintains adequate system of internal controls, 3. perparing f.s., tax returns and itnernal reports
What does the Treasurer do
has custody of the corporations’ funds an dis responsible for maintining the ocmpany’s cash position
what does the internal audit staff do
- also serve the CFO, reviwing teh reliabiltiy and integrityof finacial informaiton provided by the controller and treasurer, make sure internal control systems are funciton properly to safeguard corproate assets
what is the VP of operations
oversees employees with line positions ex company might have multiple plant managers and each one would reprot to vp of operations
What are the IMA’s statement of ethical professional practice?
- competence, confidentiality, integrity, creditability
what does it mean by competence
- maintain professioanl competence, 2. perform professional duties in accordanc with relevant laws, regulationsa dn technical standards, 3. prepare complete and clear reports and recommendations, 4. communicate professional limitations that would preclude responsible judgement or successful performance of an activity
What does it mean by confidentiality?
- refrain from disclosing confidential info, inform suboridantes as how to handle confidental informaiton, refrain from using ocnfiential info for unethical or illegal advantage
What does it mean by integrity?
avoid conflicts of interest, refrain from activity that would prejudice tehir ability to carry out their duties ethically, refrain from engaging in or supporting any activity that would discredit the accouting profession
what does it mean by creditability- objectivity?
communciate informaiton fairly and objectiviely, disclsoe fully all relevant informaiton that oculd reasonably be expected to influence a suer’s understanding of the reports, comments and recommendations presented
What is the value chain
all activities assocaited with provdiign a product or service
Explain a value chain for a manufacutring company
- research and development
- Product design
- acquisition of raw materials
- Production
- sales and marketing
- delivery
- customer relations
- subsequent service
What is ERP
Enterprise Resource Planning Software Systems
Explain ERP
- used to help manage the value chain
- provides comprehensive, centralized and integrated sources of information
- used to manage all major business processes (from purchasing, to manufacutring to Human resources)
What does CIM Stand for?
Computer Integrated Manufacturing
Explain CIM
- untouched by human hands
2. automation significantly reduces direct labour costs in many cases
What does B2B stand for
Business to Business e-commerce
Describe B2B
- cuts out the middle man by purchasing online from an online supplier
- effects the value chain
What is Just in time or JIT
Just in time Inventory Methods
Define JIT
good are manufacutred or purchased just in time for use
- reduces inventories, this can be huge advantage in an industry where products become obsolete overnight
- also called lean production
Descirbe Quality with JIT
JIT Inventory system also requires an increased emphasis on product quality
- many companies have installed TQM (total quality management) Systems
What is Total Quality Management Systems
- to reduce defects in finished products
- goal to achieve zero defects
- need timly data on defective products, rework costs, costs of honoring warranties,
- usually teh info acquired helps to design the product or to reduce setup tiem and decrease error
- also provides informaiton on non-finanical measures (customer satisfaction, nubmer of service calls etc)
Define ABC
overhead is allocated based on each product’s use of economic resoruces as it undergoes various activities
- beneficial becasue it results in more accurate prodcut costing and more scrutiny in all activities involved in the value chain
What is Theory of COnstraints?
- used to identify and manage constraints in order to achieve company goals
- all comapnies’ ahve certain aspects of their busienss that create “bottlenecks”
What is lean manufacturing
manage operations more affectively and with more control
- Goal is to eliminate waste and concentrate more on customer’s needs
what are the 5 basic principles to the lean thinking process
- Value, 2. Value Stream, 3. Make the value stream flow, 4. Implement a pull system, 5. strive for perfection
Describe Value in the lean thinking process
- process of target costing,
- acceptable price a customer is willing to pay for a specific product
- Key: to achieve optimal price for customers while realizing the greatest profit potential
Describe the value stream in the lean thinking process
- the entire flow of a prodcut’s life thorugh each stage of prodution
- evaluate what is value added and what is waste
Descirbe “make the value stream flow” in the lean thinking process
- need ofr the produciton process to have a continuous flow
- any disruption in the flow can have determental effects on the functioning of a company and on customer satisfaction
Describe “implement a pull system” in the lean thinking process
prodcut should not be made until the customer orders it
- prodcution capacity is flexible and each stage of the value chain is well designed and defined
describe “strive for perfection” in the lean thinking process
deals with the target qualitythat managemetn is seeking to meet
What changes need to be made when compaines change from traditonal mass prodcution to lean thinking
requires change in the way companies
- control
- measure
- accoutn for their process
What is the Balance Scorecard
uses fianical and non-finaical measures to measure and evaluate all aspets of the company’sperations
ie. in order to increase return on assets the comapny must increase their sales
