Managerial Accounting Chapter 1
outsourcing
act of using another company to provide goods or services that your company requires
corporate social responsibility (CSR)
actions that firms take to assume responsibility for their impact on the environment and social well-being
kaizen
another process that is often linked to Six Sigma and is designed for continuous improvement by eliminating waste and increasing efficiencies; a Japanese word meaning change for the better
Chartered Financial Analyst (CFA)
certification for a career in the finance and investment domains; requirements include a bachelor's degree or four years' experience and passing all three sections of the exam
Certified Management Accountant (CMA)
certification for a specialist in corporate accounting management, including financial analytics, budgeting, and strategic assessment; requires a bachelor's degree, two years of work experience, and successfully passing both parts of the exam
generally accepted accounting principles (GAAP)
common set of rules, standards, and procedures that publicly traded companies must follow when composing their financial statements
effective communication
conveying information in both written and oral forms in a way that the intended audience can understand
chief financial officer (CFO)
corporation officer who reports to the CEO and oversees all of the accounting and finance concerns of a company
Enrolled Agent (EA)
credential focusing on a career in taxation; created by the IRS to signify significant knowledge of the US tax code and the ability to apply the concepts of that code
Certified Internal Auditor (CIA)
credential offered by the Institute of Internal Auditors (IIA) and one of the only certifications accepted worldwide; requirements include a bachelor's degree, two years of work experience in a related field, and passing the three sections of the examination
Certified Government Auditing Professional (CGAP)
designation exclusively for auditors employed throughout the public sector (federal, state, local); requirements are the same as for the CIA, but with a different exam
globalization
development of business through international influence, or extending social and cultural aspects around the world
internal auditor
employee of an organization whose job is to provide an independent and objective evaluation of the company's accounting and operational activities
cost accountant
employee who amasses large sums of data, checking for accuracy and then formulating the cost of raw materials, work in process, finished goods, labor, overhead, and other associated manufacturing costs
chief executive officer (CEO)
executive within a company with the highest ranking title who has the overall responsibility for the management of a company; reports to the board of directors
Sarbanes-Oxley Act (SOX)
federal law that regulates business practices; intended to protect investors by enhancing the accuracy and reliability of corporate financial statements and disclosures through governance guidelines including sanctions for criminal conduct
treasurer
financial officer of a corporation reporting to the CFO who is in control of the finance side of the business (cash position, corporation funds)
controller
financial officer of a corporation reporting to the CFO who is responsible for an organization's accounting records, financial statements, tax returns, and internal reporting
government agency
found at all levels of government: federal, state, county, city, and so on; includes military, law enforcement, airports, and school systems
intangible good
good with financial value but no physical presence; examples include copyrights, patents, goodwill, and trademarks
board of directors
group of individuals elected by the shareholders of a company with the role of placing management, supervising management, and making key decisions on major issues of the company
Financial Accounting Standards Board (FASB)
independent, nonprofit organization that sets financial accounting and reporting standards for both public and private sector businesses in the United States that use Generally Accepted Accounting Principles (GAAP)
just-in-time (JIT) manufacturing
inventory system that companies use to increase efficiency and decrease waste by receiving goods only as they are needed within the production process, thereby reducing warehousing costs
commercial awareness
knowing how a business is run and how it is influenced by the external environment, and knowing and understanding the overall industry within which the business is operating
Foreign Corrupt Practices Act (FCPA)
law that specifically prohibits payments to foreign government officials to aid in attaining or retaining business and requires a company to have good internal controls so a slush fund to pay bribes cannot be created and maintained
sustainability
meeting the needs of the present generation without compromising the ability of future generations to meet their own needs by being aware of current economic, social, and environmental impacts
automation
method of using systems such as computers or robots to operate different processes, and machinery to improve efficiencies and lower direct labor costs
controlling
monitoring of the planning objectives that were put into place
nonmonetary accounting information
not relating to money or currency, such as the quantity of materials, number of employees, number of hours worked, and so forth
lean business model
one in which a company strives to eliminate waste in its products, services, and processes, while still fulfilling the company's mission
continuous improvement
ongoing effort to improve processes, products, services, and practices
tangible good
physical good that customers can handle and see
total quality management (TQM)
process in which management and employees look to reveal waste and errors, streamline the supply chain, improve customer relations, and confirm that employees are informed and properly trained
theory of constraints (TOC)
process of recognizing and removing bottlenecks within the value chain that may be limiting an organization's profitability
planning
process of setting goals and objectives
managerial accounting
process that allows decision makers to set and evaluate business goals by determining what information they need to make a particular decision and how to analyze and communicate this information
Institute of Management Accountants (IMA)
professional organization for management accountants that provides research, education, a means of knowledge sharing, and practice development to its members
Lean Six Sigma (LSS)
quality control program that depends on a combined effort of many team members to enhance performance by analytically removing waste and diminishing variations between products
monetary accounting information
relating to money or currency
strategic planning
setting priorities and determining how to allocate corporate resources to help an organization accomplish short-term and long-term goals
mission statement
short statement of a company's purpose and focus
Certified Fraud Examiner (CFE)
signifies proven proficiency in fraud prevention, detection, and deterrence; requirements include bachelor's degree, two years of work-related experience, moral character references, and passing of four separate exams
internal user
someone inside the company or organization who is responsible for managing the company's business interests and executing decisions (e.g., all levels of management, owner, and other employees)
budget analyst
someone who arranges and manages the master budget and compares master budget projections to actual results
financial analyst
someone who assists in preparing budgets and tracking actual costs, and performs other tasks that support other management personnel in organizing forecasts and projections
whistleblower
someone who provides evidence of fraud
external user
someone who relies on the financial statements and annual reports to access information about a company in order to make more informed decisions (e.g., creditor, tax authority and regulator, investor, customer, competitor, and others)
cash-management accountant
someone with responsibilities that include transferring monies between accounts, monitoring deposits and payments, reconciling cash balances, creating and tracking cash forecasts, and performing all other cash-related financial processes
enterprise resource planning (ERP)
system that helps a company streamline its operations and helps management respond quickly to change
objective
target that needs to be met in order to meet company goals
nonprofit (not-for-profit) organization
tax-exempt organization that serves its community in a variety of areas
radio-frequency identification (RFID)
technology that uses electromagnetic fields to routinely identify and trace inventory tags that have been attached to objects
balanced scorecard
tool used to evaluate performance using qualitative and nonqualitative measures
Certified Public Accountant (CPA)
top tier in accounting certifications; in the United States, each state has different educational and experience requirements, and certification requires passing the four-part CPA administered by the American Institute of Certified Public Accountants (AICPA)
bribery
when an organization or representative of an organization gives money or other financial benefits to another individual, business, or official in order to gain favor or to manipulate a business decision
evaluating
comparing actual results against the planned results
goal
what a company expects to accomplish over time
collaboration
working in cross-functional teams and earning the trust and respect of colleagues in order to complete a task
