Chapter 1: What Is Managerial Accounting Flashcards
___ focuses on providing historical financial information to external users including owners/shareholders and creditors.
Financial accounting
___ accounting follows a set of rules provided by GAAP
Financial
___ focuses on internal users including executives, product managers, sales managers, etc. by making future projections for segments of a company with detailed projections for sales, costs, and resulting profits (or losses) at a high level of detail, but doesn’t not provide detailed information about each product.
Managerial accounting
___ accounting uses non-financial measures such as percentage of defective products or percentage of on-time deliveries to customers.
Managerial
Two important functions that enable management to continually plan for the future and assess implementation are called ___ and ___.
Planning and control
___ is the process of establishing goals to employees of the organization, income and expense goals, and helps to identify any deviations from these goals.
Planning
___ is the process of evaluating whether the organizations plans were implemented effectively in the planning process and leads to refined goals in the future.
Control
F. How do organizations formalize their strategic plans?
Creating a budget
What are the different forms of a budget?
Budgeted income statement
Capital budget
Cash flow budget
___ indicates a profit plan for the future.
Budgeted income statement
___ shows the long-term investments planned for the future.
Capital budget
___ outlines cash inflows and outflows for the future.
Cash flow budget
Organizational structure:
- Board of Directors
- ___
3: VP and ___
4: ___, ___, and ___
5: Managerial accountant, financial accountant, and ___
2: CEO
3: CFO
4: Controller, treasurer, and internal auditor
5: Tax accountant
___ is in charge of the organizations finance and accounting functions, oversees all accounting and finance personnel, and reports directly to the CEO.
CFO
___ is responsible for managing the accounting staff such as the managerial accountant, financial accountant, and tax accountant.
Controller
*The ___ accountant prepares information used for decision making within the organization including operational budgets, cost estimates for existing products, budgets for new product lines, and profit and loss reports by division.
Managerial
The ___ accountant prepares financial information, in accordance with GAAP, for those outside the company including the quarterly reports 10Q and annual reports 10K.
Financial
The ___ accountant prepares tax reports for government agencies including the IRS.
Tax
___ obtains sources of financing for the organization, projecting cash flow needs, and managing cash and short-term investments (financial decisions).
Treasurer
The ___ confirms that the company has controls that ensure accurate financial data, and verifies the financial information provided by accountants.
Internal auditor
In the event of a conflict with the CFO, and internal auditor can report directly to ___.
Board of directors OR audit committee
An organizations structure depends upon ___ and ___.
Size and reporting requirements
What standards have been established to help guide accounting professionals through ethical dilemmas?
What are the four core responsibilities?
The IMA (institute of managements accountants) Core: competence, confidentiality, integrity, and credibility
Resolution of Ethical Conflict: What are the five steps?
- Follow policies of organization regarding ethical conflicts
- If following organizations policies does not effectively resolve the conflict, discuss with immediate supervisor unless he/she is involved
- If the immediate supervisor cannot reach satisfactory resolution, it should be presented to the next higher managerial level
- If all higher levels of management do not reach a satisfactory resolution, board of directors, owners, etc may have acceptable reviewing authority
- Another option includes an objective advisor, I.e., IMA
An ___ is designed to record and share information across functional areas and across geographical areas and provide real time data to all users.
ERP (enterprise resources planning system)
When deciding on an ERP system, what should happen?
Benefits of using the system should outweigh the cost of implementing
___ are all costs related to the production of goods and can be further classified as DM, DL, and MFO
Manufacturing costs
___ are materials used in production which are easily traced to a product.
DM
F. ___ includes the workers who convert materials into a finished product and whose time can easily be traced to a product.
DL
___ are all costs associated with the production process other than DM and DL and are further classified as indirect materials, indirect labor, and others (insurance, utilities, depreciation, maintenance).
MFO
___ include glue, paint and screws
Indirect materials
___ include production supervisors who oversee several different product lines.
Indirect labor
___ are costs that are not related to the production of goods which are further classified as selling costs and GandA costs and are expensed ___.
Non-manufacturing/period costs
During the period incurred
___ are costs incurred to obtain customer orders and provide customers with a finished product which include advertising, sales commission, salaries for marketing and advertising personnel, etc.
Selling costs
F. *___ are costs related to the overall management of an organization which include accounting, HR, legal, executive, and IT
General and Administrative costs
Manufacturing/product costs include ___ and are expensed ___ .
DM, DL, and MFO
When goods are sold
Three inventory accounts:
Raw materials
Work-in-process
Finished goods
*each an asset account on the balance sheet
___ is an expense account on the income statement that represents the cost of all goods sold in the period.
COGS
___ companies buy and sell goods, but typically do not manufacture goods..
Merchandising
___ companies produce and sell goods.
Manufacturing
F. Cost Flow Equation:
Inventory beginning + purchases - inventory ending = COGS
Beginning balance (BB)
+ transfers in (TI)
- ending balance (EB)
= transfers out (TO)
quiz: ___ is a field of accounting that provides economic and financial information for internal users.
Managerial accounting
quiz: ___ are costs that are a necessary and integral part of producing the finished product.
Product costs
quiz: ___ is work of factory employees that has no physical association with the finished product, or it is impractical to trace the costs to the goods produced.
Indirect labor
quiz: ___ are costs that are matched with the revenue of a specific time period and charged to expense as incurred.
Period costs
quiz: ___ is work of factory employees that can be physically and conveniently associated with converting raw materials into finished goods.
Direct labor
quiz: Indicate how each of the following costs should be classified: Advertising
Period costs
quiz: Indicate how each of the following costs should be classified: Factory supervisor’s salary
MFO
quiz: Indicate how each of the following costs should be classified: Wages paid to assembly-line workers who install interiors in automobiles.
DL
quiz: Indicate how each of the following costs should be classified: Salary paid to mechanics who maintain and repair factory equipment.
MFO
quiz: Indicate how each of the following costs should be classified: Supplies for the general office.
Period costs
quiz: Indicate how each of the following costs should be classified: Utility cost for the store
Period costs
quiz: Indicate how each of the following costs should be classified: Rubber latex purchased for the use in the manufacture of automobile tires.
DM
quiz: Indicate how each of the following costs should be classified: Rent on factory equipment.
MFO
quiz: Indicate how each of the following costs should be classified: Salary paid to the company’s chief executive officer.
Period costs
quiz: Financial and managerial accounting are similar in that both:
a. have the same primary users.
b. have reports that are prepared quarterly and annually.
c. deal with the economic events of an enterprise.
d. produce general-purpose reports.
c. deal with the economic events of an enterprise.
*quiz: Product costs are expenses on the income statement when:
a. raw materials for the product are purchased.
b. the order is received for the product.
c. the product is sold.
d. the product completes the manufacturing process.
c. the product is sold.
