Chapter 1 - Introduction to Managerial Accounting

Question 1

ISO 9001:2008

Answer 1

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 2

BUDGET

Answer 2

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 3

AUDIT COMMITTEE

Answer 3

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 4

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

Answer 4

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

Question 5

INTEGRATED REPORTING

Answer 5

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 6

INSTITUTE OF MANAGEMENT ACCOUNTANTS (IMA)

Answer 6

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

Question 7

CHIEF FINANCIAL OFFICER (CFO)

Answer 7

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

Question 8

CROSS-FUNCTIONAL TEAMS

Answer 8

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

Question 9

PLANNING

Answer 9

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

Question 10

EXTENSIBLE BUSINESS REPORTING LANGUAGE (XBRL)

Answer 10

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 11

DECISION MAKING

Answer 11

Identifying possible courses of action and choosing among them.

Question 12

CHIEF OPERATING OFFICER (COO)

Answer 12

The position responsible for overseeing the company’s operations.

Question 13

SUSTAINABILITY

Answer 13

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

Question 14

AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)

Answer 14

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 15

SARBANES-OXLEY ACT OF 2002 (SOX)

Answer 15

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 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

CONTROLLING

Answer 17

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 18

LEAN THINKING

Answer 18

A philosophy and business strategy of operating without waste.

Question 19

CHIEF EXECUTIVE OFFICER (CEO)

Answer 19

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

Question 20

CONTROLLER

Answer 20

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

Question 21

JUST-IN-TIME (JIT)

Answer 21

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 22

INTERNAL AUDIT FUNCTION

Answer 22

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

Question 23

COST-BENEFIT ANALYSIS

Answer 23

Weighing costs against benefits to help make decisions.

Question 24

TREASURER

Answer 24

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

Question 25

ENTERPRISE RESOURCE PLANNING (ERP)

Answer 25

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

Question 26

THROUGHPUT TIME

Answer 26

The time between buying raw materials and selling finished products.

Question 27

DIRECTING

Answer 27

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

Question 28

TOTAL QUALITY MANAGEMENT (TQM)

Answer 28

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 29

TRIPPLE BOTTOM LINE

Answer 29

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.

Question 30

BOARD OF DIRECTORS

Answer 30

The body elected by shareholders to oversee the company.