Chapter 1: Managerial accounting Flashcards
what are the 3 important pillars of business?
Having knowledge and skills of a valuable job. E.g. how to build a good car.
Knowing how to sell.
Knowing your numbers, what drives them, and how to change them.
Managerial accounting stands here (the last one)
Managerial accounting
field of accounting that provides economic and financial information (reports) for managers and other internal users
They see more details down to each purchase and costs
Examples: unit costs, detailed budgets, maintenance fees vs downtime losses, cost structures, %of labor, %of raw material, manufacturing costs, etc..
what is another name used for Managerial Accounting?
management accounting
are financial statements for external or internal users?
they are more for external users
these include shareholders and creditors
are financial statements part of managerial account or financial accounting?
financial accounting
give examples of what is included in financial statements given to external users
balance sheet
incomestatement
cash flowstatement
what is the main difference between managerial accounting and financial accounting?
financial accounting does not tell you to the same extent all the details about the company
on the other hand, managerial accounting sees more details down to each purchase and costs
what is the difference between the types and frequency of reports between financial and managerial accounting?
in financial accounting, its financial statements reported quarterly and annually
in managerial accounting, its internal reports reported as frequently as needed
what are the contents of a financial statement (report)
pertains to the business as a whole
highly aggregated (condensed)
limited to double-entry accounting and cost data
generally accepted accounting principles
what are the contents of an internal report
pertains to sub units of the business
very detailed
extends beyond double entry accounting to any relevant data
standard is relevance to decisions
what is the difference between the verification process in managerial accounting and financial accounting
managerial accounting reports have no independent audits
financial accounting reports are audited by CPA
what si the difference between the purpose of the managerial and financial reports?
managerial reports have special purposes for specific decisions
financial reports are more general-purpose
what are the manager’s functions
planning
directing
controlling
what does managerial planning require?
requires management to look ahead and to establish objectives
what does managerial directing involve?
involves coordinating a company’s diverse activities and human resources to produce a smoothly running operation
Implement their plans and coordinate employees
what does managerial controlling mean?
is the process of keeping the company’s activities on track
Need to see if everything is going according to plan
what is the value chain?
the activities that add value to the product
do all activities in the value chain necessarily add value to the products?
nah boy
what is the downside of the activities that don’t add value to the product in the value chain?
these will still increase your costs.
The goal is to minimize these activities
activity based costing (ABC)
allocating overhead costs
under activity based costing (ABC), what is overhead allocation based on?
based on each product’s use of economic resources as it undergoes various activities
Balanced Scorecard
is a performance-measurement approach that uses both financial and non-financial measures
evaluates all aspects of a company’s operations in anintegratedway
Indicate whether the following statement is true or false and explain why
Financial accounting reports pertain to subunits of the business and are very detailed
False because Financial accounting is summarizing what is happening, like a snapshot
Indicate whether the following statement is true or false and explain why
Managerial accounting reports must follow generally accepted accounting principles and are audited by chartered professional accountants
False because managerial accounting reports have no independent audits
Indicate whether the following statement is true or false and explain why
Managerial accountants explain and report manufacturing and non-manufacturing costs and determine cost behaviours, but are not involved in the budget process
This shit be false because putting the budget is the main part of Managerial accounting
Indicate whether the following statement is true or false and explain why
Managers’ activities and responsibilities can be classified into three broad functions: planning, directing, and controlling
true
Indicate whether the following statement is true or false and explain why
As a result of the Sarbanes-Oxley Act of 2002, top managers must certify that the company maintains an adequate system of internal control
true
Indicate whether the following statement is true or false and explain why
Management accountants follow a code of ethics developed by the U.S. Institute of Management Accountants
true
indicate if the following characteristic relates to Financial or Managerial accounting
General-purpose reports
financial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Reports are used internally
managerial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Prepared in accordance with generally accepted accounting principles
financial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Special-purpose reports
managerial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Limited to historical cost data
financial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Reporting standard is relevant to the decision to be made
managerial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Financial statements
financial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Reports generally pertain to the business as a whole
financial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Reports generally pertain to subunits
managerial accounting
indicate if the following characteristic relates to Financial or Managerial accounting
Reports issued quarterly or annually
financial accounting
