Chapter 1 Week 1

Question 1

What is Managerial Accounting?

Answer 1

process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of organizational goals.

Question 2

Who are Managerial Accountants?

Answer 2

specialists who use the tools of managerial accounting to help the organization and its managers run the operation effectively, often given the title of analyst.

Question 3

What are the 3 steps of an organization pursuing its goals?

Answer 3

Acquire Resources —>Hires People—>Engages in Organized Activities

Question 4

What are the 4 management processes that are used for an organization to achieve its goals?

Answer 4

Decision Making
Planning
Directing Operational Activities
Controlling

Question 5

What are the activities of the 4 management processes used in organization to achieve its goals?

Answer 5

Decision Making -making a choice between alternatives
Planning -detailed description of anticipate financial and operational activities
Directing Operational Activities -day to day running of an organization
Controlling -ensuring the organization and its managers are working towards its goals

Question 6

What are the 5 major support objectives of management accounting?

Answer 6

Providing information for decision making and planning
Assisting managers in directing and controlling operational activities
Motivating managers and other employees toward the organization’s goals
Measuring the performance of activities, subunits, managers, and other employees in an organization
Assessing the organizations competitive position, and ensuring its long-run competitiveness

Question 7

What is the balanced scorecard?

Answer 7

Management framework to assess competitive position. A model of business performance evaluation which includes financial and non-financial measures.

Question 8

What are 4 categories of Measurements and Goals (balanced scorecard)?

Answer 8

Financial Perspective
Customer Perspective
Internal Business Process Perspective
Learning and Growth Perspective

Question 9

What is the difference between managerial and financial accounting?

Answer 9

Managerial accounting focused on the needs of internal stakeholders.

Financial accounting focused on the needs of external stakeholders.

Question 10

What is cost accounting system?

Answer 10

part of core accounting accumulates the cost of producing products and services

Question 11

What are line positions?

Answer 11

directly involved in the provisions of goods or services

Question 12

What are staff positions?

Answer 12

supervise activities that support overall mission but are indirectly involved in ops activities.

Question 13

What is a CFO?

Answer 13

exec. responsible for all accounting and finance functions, an org top managerial and financial accountant

Question 14

What is a controller?

Answer 14

Same role as a CFO often used as a title in smaller org.

Question 15

What is a chief performance analyst?

Answer 15

Executive position in some larger organizations where all managerial accounting, an financial planning are overseen by this person.

Question 16

Who is the treasurer?

Answer 16

typically responsible for raising capital and safeguarding an orgs assets. Also credit policy, and insurance coverage.

Question 17

Who is an Internal Auditor?

Answer 17

Performs an internal review of the accounting processes both managerial and financial accounting. Provides report to top level execs, and board on the effectiveness of accounting system.

Question 18

What is value?

Answer 18

The determination by the customer if an organizations product or service is worthy of purchase.

Question 19

How do upstream and downstream differ in the value chain?

Answer 19

Upstream - all the contributors to the creation of value

Downstream - all the contributions made to distribute, facilitate the movement of product or services to customer

Question 20

What is the value chain?

Answer 20

set of linked, value creating activities, ranging from securing raw materials, and energy to deliver products and services

Question 21

What are cost drivers?

Answer 21

the factors that cause costs to be incurred in each activity in the value chain

Question 22

What are 2 ways to attain a competitive advantage?

Answer 22

Perform activities in the value chain at the same quality of competitors at a lower cost

or

Perform activities in the value chain at a higher quality than competitors at no greater cost

Question 23

What is capacity?

Answer 23

the upper limit on the amount of goods or services that an orgs can produce in a specified period of time

Question 24

What is theoretical capacity?

Answer 24

upper limit on production of goods or services if everything works perfectly

Question 25

What is practical capacity?

Answer 25

realistic upper limit on production of goods or services (real world)

Question 26

Using the Pizza shop as an example explain the difference in key-resources supplied, resources used, and resources unused.

Answer 26

The practical capacity

The cost of practical capacity used

The cost of practical capacity unused

Question 27

What is a Cost Management System?

Answer 27

a proactive management planning and control system with four key objectives aka activity accounting

Question 28

What are the 4 objectives of a cost management system?

Answer 28

1-measure the cost of resources consumed, and the cost of resources unused
2-identify and eliminate non-value added costs
3-Determine the efficiency and effectiveness of major activities in an org.
4-Evaluate new activities that can improve future performance

Question 29

What are non-value-added costs?

Answer 29

costs that can be eliminated without deterioration of product quality, performance, or perceived value

Question 30

What is activity based costing (ABC)?

Answer 30

cost of organizations significant activities accumulated and then assigned to goods or services w/how those are used in production of goods and services. Helps management understand casual links b/w activities and cost

Question 31

What is activity based management (ABM)?

Answer 31

Management using ABC.

Question 32

What is ethical standard of managerial accountants?

Answer 32

From the Public Company Accounting Oversight Board (PCAOB):

“overarching ethical principles of honesty, fairness, objectivity, responsibility “