Chapter 1 - Horngren's 17th

Question 1

Management Accounting

Answer 1

Management accounting measures, analyzes, and reports financial and nonfinancial information that helps managers make decisions to fulfill organizational goals. Management accounting need not be G A A P compliant.

It focuses on internal reporting and is not restricted by generally accepted accounting principles (GAAP).

Question 2

Managers use management accounting information to

Answer 2

Develop, communicate, and implement strategies

Coordinate product design, production, and marketing decisions and evaluate a company’s performance

Question 3

Financial Accounting

Answer 3

focuses on reporting financial information to external parties such as investors, governmental agencies, banks, and suppliers, based on G A A P.

Question 4

Cost Accounting

Answer 4

measures, analyzes, and reports financial and nonfinancial information related to the costs of acquiring or using resources in an organization

Question 5

The value chain

Answer 5

chain is the sequence of business functions by which a product is made progressively more useful to customers.

Question 6

The value chain consists of the following

Answer 6

Research and Development
Design of Products and Processes
Production
Marketing (including Sales)
Distribution
Customer Service

Question 7

These two functions together are known as the Supply Chain.

Answer 7

Production and Distribution are the parts of the value chain associated with producing and delivering a product or service.

Question 8

The supply chain describes

Answer 8

the flow of goods, services, and information from the initial sources of materials, services, and information to their delivery, regardless of whether the activities occur in one organization or in multiple organizations.

Question 9

ever-improving levels of performance

Answer 9

Cost and Efficiency
Quality
Time
Innovation
Sustainability

Question 10

Sustainability

Question 11

Decision-Making, Planning, and Control: The Five-Step Decision-Making Process

Answer 11

Identify the problem/uncertainties.

Obtain information.

Make predictions about the future.

Make decisions by choosing among alternatives.

Implement the decision, evaluate performance, and learn.

Question 12

Planning consists of

Answer 12

selecting an organization’s goals and strategies,
predicting results under various alternative ways of achieving those goals,
deciding how to attain the desired goals, and
communicating the goals and how to achieve them to the entire organization.

Question 13

Control comprises

Answer 13

taking actions that implement the planning decisions,
evaluating past performance, and
providing feedback and learning to help future decision making.

Question 14

The most important planning tool when implementing strategy is

Answer 14

A budget is the 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.

Question 15

Staff management

Answer 15

provides advice, support, and assistance to line management

Question 16

Line management

Answer 16

is directly responsible for achieving the goals of the organization.

Question 17

1 of 3 Guidelines to Help:

The cost-benefit approach

Answer 17

compares the benefits of an action/purchase to the costs. Generally, of course, the benefits should exceed the costs

Question 18

Behavioral and technical considerations

Answer 18

recognize, among other things, that management is primarily a human activity that should focus on encouraging individuals to do their jobs better.

Question 19

Managers use alternative ways to compare costs in different decision-making situations because

Answer 19

there are different costs for different purposes.

Question 20

Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace.
There are two broad strategies:

Answer 20

cost leadership, and
product differentiation

Question 21

Strategic cost management describes

Answer 21

cost management that specifically focuses on strategic issues.