chapter 1 from old book Flashcards
does managerial accounting apply to all businesses? which are they?
yes
service, merchandising, and manufacturing
does does managerial accounting apply to all business organizations? which are they?
yes
proprietorships, partnerships, and corporations.
Not-for-profit entities as well as profit-oriented enterprises need managerial accounting.
do you need managerial accounting to advance in your career like get promoted and shid?
ye boy
all levels at a business organization have knowledge in managerial accounting
wh¡at are organizational charts used for?
the show the delegation of power in an organization
what are line positions?
give examples
positons that are contribute directly to the company’s primary revenue-generating operating activities
vice president of operations
vice president of marketing
plant managers
supervisors
production personnel
what are staff positions?
give examples
involved in activities that support the efforts of the line employees
finance
legal
human resources
why was the Sarbanes-Oxley Act of 2002 (SOX) created?
In response to corporate scandals in 2000 and 2001, the U.S. Congress enacted legislation to help prevent lapses in internal control
what does SOX clarify?
SOX clarifies top management’s responsibility for the company’s financial statements.
In addition, top managers must certify that the company maintains an adequate system of internal control to safeguard the company’s assets and ensure accurate financial reports
what is included in manufacturing costs
direct materials
direct labor
manufacturing overhead
what are indirect materials and indirect labor classified as?
manufacturing overhead
manufacturing overhead
costs that are indirectly associated with the manufacture of the finished product
what does manufacturing overhead include?
indirect materials
indirect labor
depreciation on factory buildings and machines
insurance
taxes
maintenance on factory facilities
why is direct labor dropping?
because of automation
product costs (manufacturing costs)
direct materials
direct labor
manufacturing overhead
costs that are integral in the fabrication of a product
how are product costs recorded?
as inventory when incurred
recorded as expenses when product has been sold
what are period costs (non manufacturing costs)?
costs that are matched with the revenue of a specific time period rather than included as part of the cost of a salable product
selling and administrative expenses
what is the total cost of work in process?
the cost of manufacturing this period and
the cost of the beginning work in process
ending work in process inventory
units that are only partially completed by the end of the period
cost of goods manufactured schedule
reports cost elements used in calculating cost of goods manufactured
what are the possible inventory accounts for the balance sheet of a manufacturer?
raw materials inventory
work in process inventory
finished goods inventory
raw materials inventory
shows the cost of raw materials on hand
work in process inventory
shows the cost applicable to units that have started into production but are only partially completed
finished goods inventory
shows the costs of completed goods on hand
how are the inventory accounts of a manufacturer listen in the balance sheet?
in order of liquidity
finished goods
work in process
raw materials
what is the main difference between service companies and manufacturing companies?
service companies have their products consumed immediately
what does the value chain refer to?
it refers to all activities associated with providing a product or service
what does a manufacturer’s value chain include?
include research and development
product design
acquisition of raw materials
production
sales and marketing
delivery
customer relations, and subsequent service
has computerization and automation increased the value chain’s effectiveness?
yeee boyyy
enterprise resource planning (ERP) software systems
provide a comprehensive, centralized, integrated source of information
companies can it use to manage all major business processes, from purchasing to manufacturing to human resources
ERP systems enable a two-way flow of information between a company and its major suppliers, customers, and business partners
why can ERP replace as many as 200 individuals in large companies?
an ERP system can eliminate the need for individual software packages for personnel, inventory management, receivables, and payroll
computer-integrated manufacturing (CIM)
many companies can now manufacture products that are untouched by human hands
An example is the use of robotic equipment in the steel and automobile industries
just-in-time (JIT) inventory method
goods are manufactured or purchased just in time for sale
total quality management (TQM) systems
reduce defects in finished products to hopefully achieve the zero defect level
provide information on nonfinancial measures
these include customer satisfaction, number of service calls, and time to generate reports
can overhead costs be directly traced to individual products?
nah boyyy
how can you determine each product’s cost with overhead?
by allocating overhead to various products
to obtain more accurate product costs, companies now use activity-based costing (ABC)
activity-based costing (ABC)
companies allocate overhead based on each product’s use of activities in making the product
For example, companies can keep track of their cost of setting up machines for each batch of a production process
Then companies can allocate part of the total set-up cost to a particular product based on the number of set-ups that product required
theory of constraints
specific approach used to identify and manage constraints in order to achieve the company’s goals
The balanced scorecard
performance-measurement approach
uses both financial and nonfinancial measures to evaluate all aspects of a company’s operations in an integrated fash- ion
how are the performance measures in the balance scorecard linked?
The performance measures are linked in a cause-and-effect fashion to ensure that they all tie to the company’s overall objectives
Outsourcing
hiring an outside supplier to provide elements of a product rather than producing them internally
are office supplies cost manufacturing overhead or period costs?
period costs
are rent and insurance manufacturing overhead or period costs?
manufacturing overhead
is depreciation on office equipment manufacturing overhead or period costs?
period costs
is depreciation on manufacturing building manufacturing overhead or period costs?
manufacturing overhead
are period costs included in the total manufacturing costs?
nah boyyy
in the accounting cycle of both the merchandising and manufacturing companies, where does it differ?
in the work sheets
in the closing entries
the rest remains the same
how are manufacturing companies’ spreadsheets different?
it needs two additional columns for the cost of goods manufactured schedule
we insert debit and credit columns for this schedule before the income statement columns
how are manufacturing companies’ closing entries different?
Manufacturing companies use a Manufacturing Summary account
it closes all accounts that appear in the cost of goods manufactured schedule
The balance of the Manufacturing Summary account is the Cost of Goods Manufactured for the period
Manufacturing Summary is then closed to Income Summary
The group of officials elected by the stockholders of a corporation to formulate operating policies, select officers, and otherwise manage the company
board of directors
Corporate officer who has overall responsibility for managing the business and delegates responsibilities to other corporate officers
CEO
Corporate officer who is responsible for all of the accounting and finance issues of the company
CFO
