Managerial Accounting - Chapter 1

Chief Executive Officer (CEO)

The position hired by the board of directors to oversee the company on a daily basis.

Chief Financial Officer (CFO)

The position responsible for all of the company's financial concerns.

Controller

The position responsible for general financial accounting, managerial accounting, and tax reporting.

Chief Operating Officer (COO)

The position responsible for overseeing the company's operations.

Treasurer

The position responsible for raising the firm's capital and investing funds.

Institute of Management Accountants (IMA)

The professional association that promotes the advancement of the management accounting profession.

What is the role of the internal auditor in an organization?

The role of an internal auditor is to ensure that the company's internal controls and risk management policies function properly.

What is the role of a treasurer in an organization?

The treasurer is primarily responsible for raising capital (through issuing stocks and bonds) and investing funds.

American Institute of Certified Public Accountants (AICPA)

The world's largest association representing the accounting profession; together with the Chartered Institute of Management Accountants(CIMA), offers the Chartered Global Management Accountant (CGMA) designation.

________ recognizes that a company's performance should be viewed not only in terms of its ability to generate economic profits for its owners, as has traditionally been the case, but also in terms of its impact on people and the planet.

Triple bottom line

The IMA Statement of Ethical Professional Practice standard of integrity mandates that each member has a responsibility to ________.

abstain from engaging in or supporting any activity that might discredit the profession

The IMA standard that includes disclosing all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations is ________.

credibility

An explanation as to why entities act in a socially responsible manner is ________.

customers and the community expect socially responsible entities

The IMA Statement of Ethical Professional Practice standard of credibility mandates that each member has a responsibility to ________.

disclose all relevant information that could reasonably be expected to inï¬uence an intended user's understanding of the reports, analyses, or recommendations

A violation of a professional code of conduct is most likely to occur when a managerial accountant ________.

discloses confidential information of a past employer to gain advantage

Decision-making is defined as ________.

identifying alternative courses of action and choosing amongst them

The IMA standard of ________ mandates that individuals refrain from engaging in any conduct that would prejudice carrying out duties in an ethical manner.

integrity

The advantages of enterprise resource planning (ERP) systems include all of the following EXCEPT ________.

it encourages decision-making based on gut feelings

Sustainability refers to ________.

meeting the needs of the present without compromising the ability of future generations to meet their own needs

The IMA's Statement of Ethical Professional Practice requires management accountants to do all of the following EXCEPT ________.

pass the CPA exam

The IMA Statement of Ethical Professional Practice standard of competence outlines that each member has a responsibility to ________.

provide decision support information and recommendations that are accurate, clear, concise, and timely

The three main responsibilities of a managerial accountant include all of the following EXCEPT ________.

reporting, which involves providing stockholders and creditors with the information they need to make investment and lending decisions

Sarbanes-Oxley Act of 2002 (SOX)

A congressional act that enhances internal control and financial reporting requirements and establishes new regulatory requirements for publicly traded companies and their independent auditors.

Chartered Global Management Accountant (CGMA)

A designation available to qualifying American Institute of Certified Public Accountants (AICPA) members that is meant to recognize the unique business and accounting skill set possessed by those CPAs who work, or have worked, in business, industry, or government.

Lean Thinking

A philosophy and business strategy of operating without waste.

Integrated Reporting <IR>

A process resulting in a report that describes how a company is creating value over time using financial, manufactured, intellectual, human, social, and natural capital.

Certified Management Accountant (CMA)

A professional certification issued by the IMA to designate expertise in the areas of managerial accounting, economics, and business finance.

Which of the following is NOT a business trend impacting management accounting?

A shift toward a manufacturing-based economy

Audit Committee

A subcommittee of the board of directors that is responsible for overseeing both the internal audit function and the annual financial statement audit by independent CPAs.

Which of the following characteristics does NOT pertain to management accounting?

Abides by externally imposed standards such as GAPP

Managerial Accounting

Accounting system designed to provide internal managers with accounting information needed to plan, direct, and control operations.

Fiscal Accounting

Accounting system geared toward producing annual and quarterly consolidated financial statements that will be used by investors and creditors to make investment and lending decisions.

Who reports directly to the board of directors?

Audit committee

Who is responsible for all of the company's financial concerns?

CFO

Providing decision support that is accurate, clear, concise, and timely is in accordance with which standard of ethical professional practice?

Competence

Cross-functional teams

Corporate teams whose members represent various functions of the organization, such as R & D, design, production, marketing, distribution, and customer service.

________ consist(s) of employees representing various functions of the company, such as R&D, design, production, marketing, distribution, and customer service.

Cross-functional teams

Which of the following is NOT a "soft skill" competency needed by a management accountant?

Decision analysis

Which of the following is integrated throughout all managerial accounting responsibilities?

Decision-making

Triple Bottom Line

Evaluating a company's performance not only by its ability to generate economic profits, but also by its impact on people and on the planet.

Controlling

Evaluating the results of business operations against the plan and making adjustments to keep the company pressing toward its goals.

Identify which user of accounting information would mainly use financial accounting information.

External auditor

Dodd-Frank Wall Street REorm and Consumer Protection Act of 2010

Further strengthens clawback rules. Executives will not be allowed to profit from misstated financial statements, even if misstatement was not due to misconduct.

IMAs policies for reporting unethical behavior

If the conflict is not resolved through the company's procedures: -discuss with immediate supervisor (unless involved, then notify next higher level manager), if the immediate supervisor is CEO, then notify audit committee or BOD -Discuss situation with an objective advisor (IMA) -Consult an attorney -Update your resume

Critical Thinking

Improving the quality of thought by skillfully analyzing, assessing, and reconstructing it. 1 - What is the purpose, goal, or objective? 2 - What is the specific question I am trying to address? 3 - What data will I need to answer the question? 4 - What concepts am I using, and what assumptions might I be taking for granted? 5 - What conclusions am I coming to, and are my inferences logical? 6 - What are the implications and consequences of these conclusions? 7 - What is my point of view or reference point through which I have viewed the problem?

Which of the following job duties would most likely be performed by someone working for the treasurer?

Investing company funds

Planning

Involves setting goals and objectives for the company and determining how to achieve them

IMA's Statement of Ethical Professional Practice

Maintain professional COMPETENCE Preserve CONFIDENTIALITY of information Uphold their INTEGRITY Perform duties with CREDIBILITY

Identify which user of accounting information would mainly use managerial accounting information.

Manager of the sales department

Which phrase best describes the current role of the managerial accountant?

Managerial accountants facilitate the decision-making process within an organization.

Directing

Overseeing the company's day-to-day operations

Which of the following is a result of corporate accounting scandals at organizations such as Enron and WorldCom?

Passage of the Sarbanes-Oxley Act of 2002

Managers' Three Primary Responsibilities

Planning Directing Controlling

Management Accounting

Profession that involves partnering in management decision making, devising planing and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization;s strategy.

Sustainability

The ability of a system to endure without giving way or use resources so that they are not depleted or permanently damaged. In business, sustainability is also defined as the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Which is most representative of managerial accounting?

The accounting systems vary from company to company.

Board of Directors

The body elected by shareholders to oversee the company.

Which of the following is a job function of the controller?

The controller is usually responsible for general financial accounting, managerial accounting, and tax reporting.

Internal Audit Function

The corporate function charged with assessing the effectiveness of the company's internal audit controls and risk management policies.

Six Sigma

The goal of producing near perfection, with less that 3.4 defects per million opportunities.

budgets

Quantitative expression of a plan.

Which of these was established as a result of corporate scandals?

Sarbanes-Oxley Act of 2002 (SOX)

Sustainability Three Pillars

Social Environmental Economic

Enterprise Resource Planning (ERP)

Software systems that can integrate all of a company's worldwide functions, departments, and data into a single system. Advantages: Streamlined operations before mapping to ERP -Company can respond quickly to changes -Replaces hundreds of separate software systems

________ refers to meeting the needs of the present without compromising the ability of future generations to meet their own needs.

Sustainability

Which of the following is NOT a nontechnical skill possessed by a management accountant?

Technology