Chapter 1 - The Manager and Management Accounting

Question 1

What two main questions does management accounting information and reports address?

Answer 1

(1) how will this information help managers do their jobs better, and
(2) do the benefits of producing this information exceed the costs?

Question 2

What is Cost Accounting?

Answer 2

The process of measuring, analyzing, and reporting financial and nonfinancial information related to the costs of acquiring or using resources in an organization.

Question 3

What is Cost Management?

Answer 3

The approaches and activities of managers to use resources to increase value to customers and to achieve organizational goals.

Question 4

How is Financial Accounting Different From Management Accounting?

Answer 4

Financial Accounting differs from management accounting by

• purpose of the info
• users of info
• roles of management
• time span and type of reporting
• how it affects users behavior

Question 5

Strategy

Answer 5

How an organization matches its own capabilities with the opportunities in the market place. (How an organization is going to create value for its customers while standing out from competitors.)

Question 6

How does management accounting information help managers come up with a strategy? What questions have to be answered?

Answer 6

Who are our most important customers, and what critical capability do we have to be competitive and deliver value to our customers?

What is the bargaining power of our customers?

What is the bargaining power of our suppliers?

What substitute products exist in the marketplace, and how do they differ from our product in terms of features, price, cost, and quality?

Will adequate cash be available to fund the strategy, or will additional funds need to be raised?

Question 7

Value Chain

Answer 7

A set of business actions by which a product is made progressively more useful to customers.

Question 8

What are all the different parts in the value chain process?

Answer 8

1. Research and production
2. Design of products and processes
3. Production
4. Marketing
5. Distribution
6. Customer Service

Question 9

CRM (Customer Relationship Management)

Answer 9

Strategy that integrates people and technology in all business functions to deepen relationships with customers, partners, and distributors.

Question 10

Supply Chain

Answer 10

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

Question 11

What are the ket success factors companies look at when creating their supply chain and value chain processes?

Answer 11

1. Cost and efficiency
2. Quality
3. Time
4. Innovation
5. Sustainability

Question 12

What are the three guidelines management accountants follow to support managers?

Answer 12

1. Cost Benefit Approach
2. Give Full Recognition to behavioral and tech considerations
3. Use different costs for different purposes

Question 13

Cost-Benefit Approach

Answer 13

Approach to decision-making and resource allocation based on a comparison of the expected benefits from attaining company goals and the expected goals.

Question 14

Line Management

Answer 14

Managers in production marketing who are directly responsible for attaining the goals of organizations

Question 15

Staff Management

Answer 15

Managagement Accountants and Human Resources managers are examples. They provide advice and assistance to line management.

Question 16

Chief Financial Officer (Finance Director)

Answer 16

Executive responsible for overseeing the financial operations of an organization. The responsibilities of the CFO vary among organizations.

Controllership
Tax
Treasury
Risk management
Investor relations
Strategic planning

Question 17

Controllership

Answer 17

Provides financial information for reports to managers and shareholders and oversees the overall operations of the accounting system.

Question 18

Tax

Answer 18

plans income taxes, sales taxes, and international taxes.

Question 19

Treasury

Answer 19

Oversees banking and short- and long-term financing, investments, and cash management.

Question 20

Risk Management

Answer 20

manages the financial risk of interest-rate and exchange-rate changes and derivatives management.

Question 21

Investor Relations

Answer 21

communicates with, responds to, and interacts with shareholders.

Question 22

Strategic Planning

Answer 22

defines strategy and allocates resources to implement strategy.