Chapter 1 Flashcards
What is accounting described as in the context of business?
Accounting is a business communication tool that translates raw data into financial results that can be assessed and compared.
Why must accounting respond quickly to changes in the business environment?
To remain useful and relevant.
What are the differences in response times to change between financial accounting and management accounting?
Financial accounting requires a democratic and sometimes lengthy response through accounting standards, while cost or management accounting emerged and evolved quickly as a direct response to changes in technology and increased management decision-making demand
What skills are necessary for a successful professional accounting career in Canada?
Skills in strategy, tax, assurance and audit, finance, financial accounting, and management accounting.
Who is considered the “father of accounting”?
Luca Pacioli, for his work on the double-entry bookkeeping system
What seven factors did A.C. Littleton identify as necessary for complete accounting practices by 1494?
A system of writing
The concept and use of arithmetic
The legal reality of private property
A form of exchange such as money
The existence of credit or loans
Commerce between buyers and sellers
Capital or items that generate wealth
How did the history of cost accounting begin?
It was used by engineers and factory managers to support production before being adopted by accountants.
How did the Hudson’s Bay Company (HBC) contribute to early management accounting?
HBC used inventory and cost control measures as early as 1670, integrating them into double-entry books for business control and accurate profit accounting.
What significant technological advancements marked the first Industrial Revolution?
The steam engine, spinning jenny, and the shift from human labor to machines and inorganic materials in factories.
What was Charles Babbage’s contribution to cost accounting during the first Industrial Revolution?
He published “On the Economy of Machines and Manufacturing,” which integrated cost and production methods and influenced cost accounting.
How did the First World War impact cost accounting?
It required cost management and clear record-keeping for new military inventions, leading to significant advancements in cost accounting methods.
What was the role of the Canadian Society of Cost Accountants during the Second World War?
They recruited cost accountants for the government and sought legislative approval for the Registered Industrial and Cost Accountant (RIA) designation.
What changes did the Canadian Society of Cost Accountants undergo post-Second World War?
They became the Society of Industrial and Cost Accountants of Canada and continued to expand their educational offerings and professional scope.
What advancements in accounting occurred during the electronic age?
The use of computers accelerated statistical costing models and decision-oriented models, broadening the role of management accountants.
When was the Certified Management Accountant (CMA) designation introduced in Canada?
In 1985, replacing the RIA designation.
