Chapter 1: Managerial Accounting

What is planning?

setting goals and objectives for the company and deciding how to achieve them -managerial accounting translates plans into budgets

cost accounting system (vs managerial)

used to accumulate cost information, and is one part of the overall accounting system -cost info accumulated by cost accounting system is used for both managerial and financial accounting

Managerial accounting: Is governed by GAAP Focuses only on historical data Focuses on financial statements and other financial reports Provides information for parties external to the organization Focuses primarily on the needs of personnel within the organization

Focuses primarily on the needs of personnel within the organization

4 parts of accounting information system

-cost accounting -general ledger -accounts payable/accounts receivable -financial reports

Which of the following characteristics relates more to managerial accounting than to financial accounting? A focus on reporting to external parties An area of accounting that is heavily regulated A focus on reporting to personnel within an organization A focus on providing information that is relevant for planning, directing, controlling, and decision making A focus on reporting to personnel within an organization and a focus on providing information that is relevant for planning, directing, controlling, and decision making

A focus on reporting to personnel within an organization and a focus on providing information that is relevant for planning, directing, controlling, and decision making

Accounting system

Accumulates financial and managerial accounting data

Wembley Company has set various goals, and management is now taking appropriate action to ensure that the firm achieves those goals. One such action is to reduce outlays for overhead, which have exceeded budgeted amounts. Which of the following functions best describes this process? Planning Organizing Controlling Coordinating Decision making

Controlling

The day-to-day work of management teams will typically comprise all of the following activities except: Planning Controlling Cost minimizing Decision making Directing operational activities

Cost Minimizing

Which of the following functions is best described as choosing among available alternatives? Planning Budgeting Controlling Decision making Directing operational activities

Decision Making

Which of the following involves the coordination of daily business functions within an organization? Planning Controlling Motivating Decision making Directing operational activities

Directing operational activities

What is Controlling?

Evaluating results of business operations against the plan and making adjustments to keep towards its goals. Ex. Comparing budgeted sales with actual sales take actions when needed. -Comparing budgeted product costs against actual product costs take actions where needed.

Managerial Accounting is the process of:

Identifying Measuring Analyzing Interpreting Communicating (internal, forecasting value)

What is Decision Making?

Management is continually making decisions while it plans, directs, and controls operations

Managerial vs. Financial Accounting

Managerial uses the data for planning, controlling, directing, decision making within a company (internally) Financial uses data to publish financial statements and other financial reports

Which of the following is NOT an objective of managerial accounting? Maximizing profits and minimizing costs Assisting in directing and controlling operations Motivating managers toward the organization's goals Measuring the performance of managers and subunits Providing information for decision making and planning

Maximizing profits and minimizing costs

Managerial accountants: Often work with regulators like the SEC Are responsible for issuing a company's annual financial statements Are found primarily at lower levels of the organizational hierarchy Are found primarily at higher levels of the organizational hierarchy Often work on cross-functional teams and are located throughout an organization

Often work on cross-functional teams and are located throughout an organization

Which of the following managerial functions involves a detailed financial and operational description of anticipated operations? Planning Measuring Controlling Decision making Directing operational activities

Planning

Key 4 Functions (basic activities) of Managerial Accounting

Planning, Directing, Controlling, Decision Making

What is Directing?

overseeing the company's day-to-day operations