accounting 1b ch15

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

management accounting provides?

information to help mangers plan and control operations as they lead the business. including the company's plant, equipment, and human resources.

accountability is created through

measuring results. therefore, employees do well on the parts of their jobs that the accounting system measures.

management accounting is not

required to meet external reporting requirements such as GAAP

mangers are?

the employees of the owners.

what does the budget show?

the expected financial impact of decisions and helps identify the resources needed to achieve goals

cost of good sold section of the income statement shows?

the flow of the product costs through the inventory.

inventoriable product costs

are products held in inventory until sold.

similarities of management accounting and financial accounting

-use the accrual basis of accounting.

service companies seek to provide services with the following three characteristics

1. high quality. 2. reasonable prices. 3. timely delivery.

financial accounting satisfies management's accountability to

1. owners and creditors for their investment decisions. 2. regulatory agencies, such as the SEC[securities exchange commission], and the FTC[federal trade commission, and the IRS[internal revenue service]. 3. customers and society to ensure that the company acts responsibly.

companies have developed the following three time saving responses

1.advanced information systems 2. e-commerce 3. just in time management. 4. total quality management

what is different on the merchandiser's income statement compared to a service company's income statement?

COGS is noted as a major expense

behavioral

MA concerns about how reports will affect employee behavior FA concern about adequacy of disclosures; behavioral implications are secondary.

scope of information

MA detailed reports on parts of the company (products, departments, territories), often on a daily or weekly basis. FA summary reports primarily on the company as a whole, usually on a quarterly or annual basis.

purpose of information

MA help managers plan and control operations FA help investors and creditors make investment and credit decisions

type of report

MA internal reports are restricted only by cost/benefit analysis;no audit required FA financial statements are restricted by GAAP and audited by independent CPAs

focus and time dimension of the information

MA relevance of the information and focus on the future. ex- 2011 budget prepared in 2010 FA relevance and reliability of the information and focus on the past ex - 2010 actual performance reported in 2011

in contrast with service and merchandising companies, manufacturing companies have?

a broad range of production activities that requires tracking costs on 3 kinds of inventory: materials inven, work in progress inven, and finished goods inven.

direct cost

a cost that can be directly traced to a cost object, such as a product. ex. direct materials and direct labor

budget is

a mathematical expression of the plan that managers use to coordinate the business's activities.

total quality management (TQM) is

a philosophy designed to provide customers with superior products and services. companies achieve this goal by continuously improving quality and reducing or eliminating defects and waste. in TQM each business function sets higher and higher goals.

managers may want to know the cost of

a product, a department, a sales territory, or an activity.

financial statements from chapters 1-14 were focused on

accounting and reporting on the company as a whole.

the completed product in finished goods inventory is

an inventoriable product cost.

merchandisers keep

an inventory of products and managers are accountable for the purchasing, storage, and sale of the product.

cost object

anything for which managers what a separate measurement of cost.

knowing the unit cost per product helps managers to set?

appropriate selling pries.

why are they called stakeholders of a company?

because each group has an interest of some sort in the business.

to remain in service, the management accounting system must have

benefits exceeding its costs.

in manufacturing companies, product costs include

both direct and indirect costs.

how do service companies know which services are most profitable?

by evaluating both revenues and costs.

planning means

choosing goals and deciding how to achieve them.

total quality management.

companies must deliver high quality goods and services in order to be successful

e-commerce

companies use the internet in everyday operations of selling and customer service. the internet sells to thousands of customers around the world by providing every product the company offers 24/7

indirect costs

cost cannot be traced directly to a cost object. ex. manufacturing overhead

managers are responsible to

external stakeholders, so they must plan and control operations carefully.

management accountability requires 2 forms of accounting

financial accounting for external reporting and management accounting for internal planning and control

financial accounting provides

financial statements that report results of operations, financial position, and cash flows both to managers and to external stakeholders: owners, creditors, suppliers, customers, the government, and society.

management accounting

focus to the accounting tools that managers use to run a business.

management accounting often requires

forward-looking information because of the futuristic nature of business decisions.

stakeholders with actions that affect society

governments and communities

stakeholders

groups to whom managers must answer.

managers must consider

how their decisions will motivate company employees and if that motivation will achieve the overall results the company desires.

on a day-to-day basis, managers

identify ways to cut costs, set prices, and evaluate employee performance.

controlling means

implementing the plans and evaluating operations by comparing actual results to the budget.

finished goods inventory

includes completed goods that have not yet been sold. finished goods are the products that t

work in process inventory

includes goods that are in the manufacturing process but not yet complete. some production activities have transformed the raw materials but the product is not yet finished or ready for sale.

materials inven

includes raw materials used in making a product.

periods costs are the expenses that are not part of?

inventoriable product cost.

just in time management

inventory held too long becomes obsolete. storing goods takes space and must be insured--that costs money. this helps managers cut costs by speeding the transformation of raw material into finished products

manufacturing companies use

labor,equipment,supplies, and facilities to convert raw materials into finished products.

primary users

management accounting (MA) internal - the company's managers. financial accounting (FA) external-investors, creditors, and government authorities.

scope of information indicates that

management accounting provides more detailed and timely information than financial accounting

behavioral reminds us that

management accounting reports affect people's behavior.

what happens when management accounting does not need to follow GAAP?

managers have more leeway in preparing management accounting reports

cost data help who?

managers make these type of decisions. [ controlling and planning.]

how od ou earn the stakeholders' trust?

managers provide information about their decisions and the results of those decisions.

knowing the cost per service helps

managers to set the price of each and then to calculate operating income.

advanced information systems

many companies use enterprise resource planning(ERP) systems to integrate all their worldwide functions, departments, and data.

just in time (JIT)

means producing just in time to satisfy needs. supplies deliver materials for today's production in exactly the right quantities just in time to begin production and finished units are completed just in time for delivery to customers.

while detailed information is important to managers, summary information is

more valuable to external users of financial data.

how to find company profit margin

net income / net sales revenue

stakeholders in financing activities

owners and creditors

in management accounting we distinguish inventoriable product costs from

period costs.

all of service company costs are

period costs; costs that are incurred and expensed in the same accounting period.

to highlight the roles of beinning inven, purchases, and ending inven, we use what system?

periodic inventory system.

finished goods

products that the manufacturer sells to a merchandiser or to other customers.

customers

provide cash and management is accountable for providing products and services for a reasonable price

creditors

provide cash management is accountable for repaying principal and interest

owners

provide cash or other assets management is accountable for providing a return on the owners' investment

communities

provide human and physical resources management is accountable for providing jobs and operating in an ethical manner to support the community.

suppliers

provide long-term assets management is accountable for purchasing the most productive assets.

government

provide permission to operate management is accountable for obeying laws and paying taxes.

employees

provide time and expertise. and management is accountable for providing a safe and productive work environment

in order to be successful, managers of both large corporations and mom and pop businesses must consider

recent business trends such as 1. shirt toward a service economy 2. global competition 3. time based competition 4. total quality management

what do merchandising companies do?

resell products they buy from suppliers

what is accountability

responsibility for one's action

income statement for merchandise company

sales revenue - sales returns and allowances - sales discount = net sales revenue -cost of goods sold = gross profit -total operating expenses =operating income -other income and expenses = net income

shift toward a service economy

service companies provide health-care, communication, banking, and other important benefits to society.

stakeholders in investing activities

suppliers

stakeholders in operating activities

suppliers, employees, and customers.

type of stakeholders

suppliers, government, owners, creditors, customers

a large decrease in the gross profit percentage may indicate

that the company has a problem with inventory theft or shrinkage or a problem with retail pricing of the products.

managers weigh

the benefits of the system(better information lead to higher profits) against the costs to develop and run the system.

what is freight in?

the cost to get the goods in the warehouse.

merchandising companies' inventoriable product costs include only what?

the cost to purchase the goods plus freight in

the activity in the inventory account provides

the information for the cost-of-goods-sold section of the income statement as: beginning inven + purchases + freight in - ending inven = COGS.

time-based competition

the internet, electronic commerce, and express delivery speed the pace of business. customers who instant message around the world will not wait two weeks to receive items purchased online. time is a new competitive turf for world class business.

management accountability

the manger's responsibility to the various stakeholders of the company.

income statement for service company.

the title: company income statement month ended xxxxx 2010 then revenue : state all revenues in outer column expenses: state all expenses, total to outer column = net income. on the side, is the vertical analysis

managers tailor their management accounting system to help

them make wise decisions

service companies have the simplest accounting since

they carry no inventories of products for sale.

suppliers

they provide products and services. management is accountable for using the goods and services to earn a profit.

global competition

to be competitive, many companies are moving operations to other countries to be closer to new markets. other companies are partnering with foreign companies to meet local needs.

erp systems help

to streamline operations, and that enables companies to respond quickly to changes in the market.

for external reporting, GAAP requires companies to?

treat inventoriable product costs as an asset until the product is sold, at which time the costs are expensed.

formula to find unit cost per item

unit cost per item = total cost of goods sold / total number of items sold.

formula to calculate the unit cost

unit cost per service=total service costs / total number of services provided.

managers in manufacturing companies must

use these resources to create a product that customers what. they are responsible for generating profits and maintaining positive cash flows.

cost/benefit analysis.

weighting the costs against the benefits is called


Kaugnay na mga set ng pag-aaral

Module 1: Introduction to ICT & Module 2: History of Computer: Basic Computing Periods

View Set

Provisional and differential diagnonses

View Set

Final Quiz Health Data Content and Standards 1.1 (RHIA & RHIT)

View Set

CA TEST 1 - Chapters 1, 2, 5.1, 5.2

View Set

E10: Week 9 (avid, cajole, enhance, nuance, rudimentary)

View Set

STAT242: Principal Component Analysis

View Set

Newborn Nursing Care and Assessment NCLEX Questions

View Set

INFS2608 Lecture 7 - Transaction Management

View Set

Principles of Marketing Practice

View Set

ATI back of chapter questions 2,4,7,9

View Set