Chapter 1 Week 1 Flashcards
What is Managerial Accounting?
process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of organizational goals.
Who are Managerial Accountants?
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.
What are the 3 steps of an organization pursuing its goals?
Acquire Resources —>Hires People—>Engages in Organized Activities
What are the 4 management processes that are used for an organization to achieve its goals?
Decision Making
Planning
Directing Operational Activities
Controlling
What are the activities of the 4 management processes used in organization to achieve its goals?
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
What are the 5 major support objectives of management accounting?
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
What is the balanced scorecard?
Management framework to assess competitive position. A model of business performance evaluation which includes financial and non-financial measures.
What are 4 categories of Measurements and Goals (balanced scorecard)?
Financial Perspective
Customer Perspective
Internal Business Process Perspective
Learning and Growth Perspective
What is the difference between managerial and financial accounting?
Managerial accounting focused on the needs of internal stakeholders.
Financial accounting focused on the needs of external stakeholders.
What is cost accounting system?
part of core accounting accumulates the cost of producing products and services
What are line positions?
directly involved in the provisions of goods or services
What are staff positions?
supervise activities that support overall mission but are indirectly involved in ops activities.
What is a CFO?
exec. responsible for all accounting and finance functions, an org top managerial and financial accountant
What is a controller?
Same role as a CFO often used as a title in smaller org.
What is a chief performance analyst?
Executive position in some larger organizations where all managerial accounting, an financial planning are overseen by this person.
Who is the treasurer?
typically responsible for raising capital and safeguarding an orgs assets. Also credit policy, and insurance coverage.
Who is an Internal Auditor?
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.
What is value?
The determination by the customer if an organizations product or service is worthy of purchase.
How do upstream and downstream differ in the value chain?
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
What is the value chain?
set of linked, value creating activities, ranging from securing raw materials, and energy to deliver products and services
What are cost drivers?
the factors that cause costs to be incurred in each activity in the value chain
What are 2 ways to attain a competitive advantage?
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
What is capacity?
the upper limit on the amount of goods or services that an orgs can produce in a specified period of time
What is theoretical capacity?
upper limit on production of goods or services if everything works perfectly
What is practical capacity?
realistic upper limit on production of goods or services (real world)
Using the Pizza shop as an example explain the difference in key-resources supplied, resources used, and resources unused.
The practical capacity
The cost of practical capacity used
The cost of practical capacity unused
What is a Cost Management System?
a proactive management planning and control system with four key objectives aka activity accounting
What are the 4 objectives of a cost management system?
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
What are non-value-added costs?
costs that can be eliminated without deterioration of product quality, performance, or perceived value
What is activity based costing (ABC)?
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
What is activity based management (ABM)?
Management using ABC.
What is ethical standard of managerial accountants?
From the Public Company Accounting Oversight Board (PCAOB):
“overarching ethical principles of honesty, fairness, objectivity, responsibility “
