Chapter 1: Managerial Accounting Flashcards
What is managerial accounting?
Managerial accounting, also called management accounting, provides economic and financial information for managers and other internal users for decision-making.
What are the distinguishing features of managerial accounting?
Managerial accounting focuses on providing information for internal decision-making, planning, directing, controlling, and is often more detailed and focused on subunits of the organization
What are the three broad functions of management in managerial accounting?
The three broad functions of management are planning, directing, and controlling.
How does managerial accounting fit into an organizational structure?
Managerial accountants serve as internal team members who assist managers in the decision-making process by providing relevant economic and financial information.
Why is business ethics important in managerial accounting?
Business ethics ensure that the management accounting practices align with the overall goals of the organization and maintain trust and integrity in financial reporting.
What is the primary purpose of managerial accounting reports?
The primary purpose of managerial accounting reports is to provide detailed financial and operational information for internal decision-making.
How often are managerial accounting reports generated?
Managerial accounting reports are generated as frequently as needed, unlike financial accounting reports which are typically quarterly and annually.
What is the verification process for managerial accounting?
Managerial accounting does not typically involve independent audits, whereas financial accounting reports are audited by CPAs.
What are the primary users of managerial accounting reports?
The primary users of managerial accounting reports are internal users, such as officers and managers within the organization.
What are the three broad functions of management?
The three broad functions of management are planning, directing, and controlling.
What does planning entail in management?
Planning requires management to look ahead and establish objectives, such as maximizing short-term profits and market share, maintaining a commitment to environmental protection, and contributing to social programs.
How does directing function in management?
Directing involves coordinating a company’s diverse activities and human resources to produce a smoothly running operation, including implementing planned objectives and providing necessary incentives to motivate employees.
What is involved in the controlling function of management?
Controlling is the process of keeping the company’s activities on track, determining whether planned goals are being met, and taking corrective action as needed.
What is the difference between line and staff positions within a company?
Line positions are directly involved in the company’s main revenue-generating operating activities, while staff positions support the efforts of the line employees and are not directly involved in these primary operations.
What are the responsibilities of the chief financial officer (CFO)?
The CFO is responsible for maintaining the accounting records, ensuring an adequate system of internal control, and preparing financial statements, tax returns, and internal reports.
What are the duties of the internal audit staff?
The internal audit staff is responsible for reviewing the reliability and integrity of financial information, ensuring that control systems are functioning properly, and investigating compliance with policies and regulations.
Why is business ethics important in managerial accounting?
Business ethics is crucial in managerial accounting because all employees are expected to act ethically in their business activities, which is fundamental to the trust and integrity of financial reporting and corporate governance.
What can happen when companies create improper incentives for managers?
Companies that create improper incentives may unintentionally encourage managers to take unethical actions to meet targets, such as using budgetary slack or engaging in fraudulent activities to receive higher compensation or maintain employment.
What are some key provisions of the Sarbanes-Oxley Act of 2002?
The Sarbanes-Oxley Act requires CEOs and CFOs to certify financial statements, mandates an adequate system of internal controls, and requires audit committees of the board to be independent, among other things to ensure corporate accountability and financial integrity.
What is corporate social responsibility?
Corporate social responsibility (CSR) refers to a company’s efforts to employ sustainable business practices with regard to its employees, society, and the environment, going beyond mere profitability to also consider the impact on people, planet, and profit.
True or False: As a result of the Sarbanes-Oxley Act of 2002, managerial accounting reports must now comply with accounting principles accepted by the accounting profession.
True.
True or False: Top managers must certify that a company maintains an adequate system of internal controls.
True.
True or False: A company’s efforts to employ sustainable business practices with regard to its employees, society, and the environment is referred to as corporate social responsibility.
True.
What is the focus of service industry trends in managerial accounting?
Service industry trends in managerial accounting focus on providing services rather than goods, with approximately 80% of Canadian and U.S. workers employed by service companies.
