Chapter 1

Question 1

Budget

Answer 1

Quantitative expression of a plan that helps managers coordinate and implement the plan. Certified Management Accountant (CMA). (p. 9) A professional certification issued by the IMA to designate expertise in the areas of managerial accounting, economics, and business finance.

Question 2

Controlling

Answer 2

One of management’s primary responsibilities; evaluating the results of business operations against the plan and making adjustments to keep the company pressing toward its goals.

Question 3

Decision Making

Answer 3

Identifying possible courses of action and choosing among them.

Question 4

Directing

Answer 4

One of management’s primary responsibilities; running the company on a day-to-day basis.

Question 5

Planning

Answer 5

One of management’s primary responsibilities; setting goals and objectives for the company and deciding how to achieve them.

Question 6

Audit Committee

Answer 6

A subcommittee of the board of directors that is responsible for overseeing both the internal audit function and the annual financial statement audit by independent CPAs.

Question 7

Board of Directors

Answer 7

The body elected by shareholders to oversee the company.

Question 8

Chief Executive Officer (CEO)

Answer 8

The position hired by the board of directors to oversee the company on a daily basis.

Question 9

Chief Financial Officer (CFO)

Answer 9

The position responsible for all of the company’s financial concerns.

Question 10

Chief Operating Officer (COO)

Answer 10

The position responsible for overseeing the company’s operations.

Question 11

Controller

Answer 11

The position responsible for general financial accounting, managerial accounting, and tax reporting.

Question 12

Cross-Functional Teams

Answer 12

Corporate teams whose members represent various functions of the organization, such as R&D, design, production, marketing, distribution, and customer service.

Question 13

Internal Audit Function

Answer 13

The corporate function charged with assessing the effectiveness of the company’s internal controls and risk management policies.

Question 14

Treasurer

Answer 14

The position responsible for raising the firm’s capital and investing funds.

Question 15

American Institute of Certified Public Accountants (AICPA

Answer 15

The world’s largest association representing the accounting profession; together with the Chartered Institute of Management Accountants (CIMA) offers the Chartered Global Management Accountant (CGMA) designation.

Question 16

Chartered Global Management Accountant (CGMA)

Answer 16

A designation available to qualifying American Institute of Certified Public Accountants (AICPA) members that is meant to recognize the unique business and accounting skill set possessed by those CPAs who work, or have worked, in business, industry or government.

Question 17

Institute of Management Accountants (IMA)

Answer 17

The professional organization that promotes the advancement of the management accounting profession.

Question 18

Cost-Benefit Analysis

Answer 18

Weighing costs against benefits to help make decisions.

Question 19

Enterprise Resource Planning (ERP)

Answer 19

Software systems that can integrate all of a company’s worldwide functions, departments, and data into a single system.

Question 20

Extensible Business Reporting Language (XBRL)

Answer 20

A data tagging system that enables companies to release financial and business information in a format that can be quickly, efficiently, and cost-effectively accessed, sorted, and analyzed over the Internet.

Question 21

Integrated Reporting

Answer 21

A process resulting in a report that describes how a company is creating value over time using financial, manufactured, intellectual, human, social, and natural capital.

Question 22

International Financial Reporting Standards (IFRS)

Answer 22

The SEC is considering whether to require all publicly traded companies to adopt IFRS. In many instances, IFRS vary from GAAP.

Question 23

ISO 9001:2008

Answer 23

A quality-related certification issued by the International Organization for Standardization (ISO). Firms may become ISO 9001:2008 certified by complying with the quality management standards set forth by the ISO and undergoing extensive audits of their quality management processes.

Question 24

Just-in-time (JIT)

Answer 24

An inventory philosophy first pioneered by Toyota in which a product is manufactured just in time to fill customer orders. Companies adopting JIT are able to substantially reduce the quantity of raw materials and finished products kept on hand.

Question 25

Lean Thinking

Answer 25

A philosophy and business strategy of operating without waste.

Question 26

Sarbanes-Oxley Act of 2002 (SOX)

Answer 26

A congressional act that enhances internal control and financial reporting requirements and establishes new regulatory requirements for publicly traded companies and their independent auditors.

Question 27

Sustainability

Answer 27

The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Question 28

Throughput time

Answer 28

The time between buying raw materials and selling finished products.

Question 29

Total Quality Management (TQM)

Answer 29

A management philosophy of delighting customers with superior products and services by continually setting higher goals and improving the performance of every business function.

Question 30

Tripple Bottom Line

Answer 30

Evaluating a company’s performance not only by its ability to generate economic profits, but also by its impact on people and on the planet.