Lesson 1 Flashcards
Managerial Accounting or Financial Accounting
the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to MANAGERS for the pursuit of an organization’s goals.
Managerial Accounting
Its intended purpose is to assist users internal to the company in making well-informed business decisions.
Managerial Accounting
Managerial Accounting or Financial Accounting
Techniques used are not dictated by accounting standards.
Managerial Accounting
TRUE OR FALSE
The presentation of managerial accounting data can be modified to meet the specific needs of its end-user.
TRUE
produces and disseminates official financial statements for public consumption that conform to prevailing accounting standards.
Financial Accounting
encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics.
Managerial Accounting
a large subset of managerial accounting that specifically focuses on capturing a company’s total COSTS of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.
Cost Accounting
It must conform to certain standards, such as generally accepted accounting principles (GAAP).
Financial Accounting
What are the types of managerial accounting?
Product Costing and Valuation.
Cash Flow Analysis.
Inventory Turnover Analysis.
Constraint Analysis.
Financial Leverage Metrics.
Accounts Receivable (AR) Management.
Budgeting, Trend Analysis, and Forecasting.,
It deals with determining the total costs involved in the production of a good or service.
Product Costing
Also known as cost-volume-profit analysis
Marginal Costing
the impact on the cost of a product by adding one additional unit into production. It is useful for short-term economic decisions.
Marginal Costing
flows into break-even analysis, which involves calculating the contribution margin on the sales mix to determine the unit volume at which the business’s gross sales equal total expenses.
Margin Analysis
is useful for determining price points for products and services.
Break-even point analysis
The reason why managerial accountants perform cash flow analysis
to determine the cash impact of business decisions.
provides a more accurate picture of a company’s true financial position, it also makes it harder to see the true cash impact of a single financial transaction.
Accrual Accounting
is a calculation of how many times a company has sold and replaced inventory in a given time period.
Inventory turnover
the amount of expense a company incurs to store unsold items.
carrying cost of inventory
Managerial accountants help determine where bottlenecks occur and calculate the impact of these CONSTRAINTS on revenue, profit, and cash flow.
Constraint Analysis
refers to a company’s use of borrowed capital in order to acquire assets and increase its return on investments.
Financial leverage
categorizes AR invoices by the length of time they have been outstanding.
Accounts Receivable Aging Report
are extensively used as a quantitative expression of the company’s plan of operation.
Budgets
the process of preparing and presenting official quarterly or annual financial information for external use.
Financial Accounting
uses pro forma measures that describe and measure the financial information tracked internally by corporate managers.
Managerial Accounting
Do Managerial Accountants Need to Follow GAAP?
No, managerial accountants are not legally obligated to follow GAAP because the documents they produce are not regulated by GAAP. These documents focus on internal company metrics that focus on company performance.
What Types of Information Does Managerial Accounting Compute?
Managerial accounting is useful for companies to track and craft spending budgets, reduce costs, project sales figures, and manage cash flows, among other tasks.
Three Pillars of Managerial Accounting
planning, decision-making, and controlling.
Key Components of Managerial Accounting
Forecasting and Performance Tracking
