Acct 363 Chapter 1 Exam #1

The database stores info in a way that allows managers to access the info they need. Many companies are building their own ___________ system

Enterprise Resource Planning (ERP)

Research & Development

generating and experimenting with ideas related to new products, services, or processes

Do not interpret that managers should proceed _________ through the value chain when planning and managing their activites

subsequently

A constant flow of innovative products is the basis for ongoing company __________

success

Controller

the financial executive primarily responsible for management accounting and financial accounting

Responsibilities of the CFO (6)

1) Controllership 2) Treasury 3) Risk Management 4) Taxation 5) Investor Relations 6) Internal Audit

Customers want companies to use the value chain and supply chain to deliver ever improving levels of performance regarding several, or all, of the following (4)

1) Cost and efficiency 2) Quality 3) Time 4) Innovation

Management Accounting key questions (2)

1) How will this info help managers do their jobs better? 2) do the benefits of producing the info exceed the costs?

(5) step decision making process Steps 1-4 are often referred to as __________

1) Identify the problem and uncertainties 2) Obtain info 3) Make predictions about the future 4) make decisions by choosing among alertnatives 5)Implement the decisions, evaluate performance, and learn PLANNING

Management accountants help managers answer these questions (4)

1) Who are our most important customers, and how do we deliver value to them? 2)What substitute products exist in the marketplace, and how do they differ from our products in terms of price and quality? 3) What is our most critical capability? Is it technology, production, or marketing? How can we leverage it for new strategic initiatives? 4) Will adequate cash be available to fund the strategy, or will additional funds need to be raised?

Processing any economic transaction means (4)

1) collecting 2) categorizing 3) summarizing 4) analyzing

Financial Accounting 1) purpose of info 2) primary users 3) Focus & emphasis 4) Rules of measurement and reporting 5) time span and type of reports 6) behavioral implications

1) communicate org.'s financial position to investors, banks, regulators, and other outside parties 2) External users such as investors, banks, regulators, and suppliers 3) Past-oriented (reports on 2007 performance prepared in 2008) 4) FS must be prepared in accordance with GAAP and be certified by external, independent auditors 5) Annual and quarterly financial reports, primarily on the company as a whole 6) primarily reports economic events but also influences behavior because manager's compensation is often based on reported financial results

Management Accounting 1) purpose of info 2) primary users 3) Focus & emphasis 4) Rules of measurement and reporting 5) time span and type of reports 6) behavioral implications

1) help managers make decisions to fulfill an organization's goals 2) managers of the org. 3) Future-oriented (budget for 2008 prepared in 2007) 4) internal measures and reports do not have to follow GAAP but are based on cost-benefit analysis 5) Varies from hourly info to 15-20 yrs, with financial and nonfinancial reports on products, departments, territories, and strategies 6) designed to influence the behavior of managers and other employess

To be success, management accountants must possess certain values and behaviors that reach well beyond basic analytic abilities (4)

1) promoting fact-based analysis and making tough-minded, critical judgments without being adversarial 2) Leading and motivating people to change be innovative 3) communication clearly, openly, and candidly 4)Having a strong sense of integrity and of doing the right things

Businesses follow one of these (2) strategies to generate profits

1) providing quality products or services at low prices 2) their ability to offer differentiated or unique products/ services that are often priced higher than the products or services of their competitors

Managers use cost accounting info to make decisions including decisions related to (5)

1) strategy formulation 2) R&D 3) budgeting 4) production planning 5) pricing

Cost management decisions include decisions such as (3)

1) the amounts and kinds of materials used 2) changes in plant processes 3) changes in product design

Value -Chain Steps (6)

1. Research & Development 2. Design of products, services, or processes 3. Production 4. Marketing 5. Distribution 6. Customer Service

Financial Accounting

Accounting that focuses on reporting to external parties such as investors, gov. agencies, banks, and suppliers

Supply Chain

Describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same organization or in other organizations.

Customer-Response Time

Describes the speed at which an organization responds to customer requests

Line Management

Management such as production, marketing, and distribution management directly responsible for attaining the goals of the organization

Staff Management

Staff (such as management accountants and human resources managers) who provide advice and assistance to line management.

A management accounting system has (2) simultaneous missions, one technical and one behavioral

Technical: help managers make wise economic decisions by providing them with the desired info Behavioral: motivate managers and other employees to aim for goals of the org.

Cost Management

The approaches and activities of managers to use resources to increase value to customers and to achieve organizational goals.

Value Chain

The sequence of business functions in which customer usefulness is added to products or services of a company.

Customer Relationship Management (CRM)

a strategy that integrates people and technology in all business functions to deepen relationships with customers, partners, and distributors

Info about _________ helps managers to manage costs, but the info and the system itself, is not cost management

accounting systems

Cost Accounting

accounting that measures, analyzes, and reports financial and nonfinancial relating to the costs of acquiring or using resources in an organization

Management Accounting

accounting that measures, analyzes, and reports financial/ nonfinancial info that helps managers make decisions to fulfill the goals of an organization

Production

acquiring, coordinating, and assembling resources to produce a product or deliver a service

As part of cost management , managers often deliberately incur __________

additional costs

A major benefit of installing a budget decision is that it compels managers to plan _________-

ahead

Management accountants help managers track performance on the chosen key success factors relative to the performance of competitors on the same factors. Tracking what is happening in other companies serves as a _____ and alerts managers to the changes in their own customers are observing and evaluating

benchmark

The most important planning tool is a __________

budget

Controller aka...

chief accounting officer

Managers use management accounting info to __________, ____________, and _________ strategy. They also use it to coordinate ______, _______ decisions, and to evaluate __________

choose; communicate; implement product design; production/ marketing decisions; performance

Budgets induce a different set of decisions with an org. because of better ___________, __________, and __________

collaboration; planning; motivation

Managers' _________ is often directly affected by the numbers in financial statements. Consequently, managers are interested in both ________ accounting and ___________ accounting

compensation; financial; management

Control

comprises taking actions that implement the planning decisions, deciding how to evaluate performance, and providing feedback and learning to help future decision making

The comparison of actual performance to budgeted performance is the __________ or __________ of info.

control; post-decision role

Because the process of preparing a budget crosses business functions, it forces __________ and _________ throughout the company, as well as with the company's suppliers and customers

coordination; communication

Companies face continuous pressure to reduce _______ of the products and services they sell

cost

____________ provides info for management accounting and financial accounting

cost accounting

Ideal Database aka...

data warehouse; infobarn

In most org.s, there also are informal relationships that must be understood when managers attempt to implement their _________. Examples include friendships among __________and the personal preferences of _________ about the managers they rely on in decision-making

decisions; managers; top management

Distribution

delivering products to buyers

Strategic Cost Management

describes cost management that specifically focuses on strategic issues

Strategy

describes how an organization will compete and the opportunities its managers should seek and pursue

Design of products, services, or processes

detailed planning and engineering of products, services, or processes

There are different costs for ___________. This theme is the management accountant's version of the ___________ notion. A cost concept used for the external-reporting purpose of accounting ___________ be an appropriate concept for internal, routine reporting to managers

different purposes; "one size does not fit all"; may not

Individual managers often require the info in an accounting system to be presented or reported _______

differently

Management is primarily a human activity that should focus on how to help individuals ___________

do their jobs better

CFO aka...

finance director

Learning

examining past performance and systematically exploring alternative ways to make better-informed decisions and plans in the future

The cost-benefit approach should be used to make the decision: Resources should be spent if the expected benefits __________ the expect costs

exceed

Chief Financial Officer (CFO)

executive responsible for overseeing the financial operations of an organization

The goal for a company is to continuously _________ its critical operations

improve

Treasury

includes banking and short and long term financing, investments, and cash management

Taxation

includes income taxes, sales taxes, and international tax planning

Risk Management

includes managing the financial risk of interest-rate of interest-rate and exchange rate changes and derivatives management

Internal Audit

includes reviewing and analyzing financial and other records to attest to the integrity of the organization's financial reports and to adherence to its policies and procedures

Cost management emphasizes _________ and _________ activities across all companies in the supply chain, as well as across each business function in an individual company's value chain to reduce ________

integrating; coordinating; costs

Making predictions requires considerable __________-. You must carefully evaluate any ________ you might have

judgement; biases

Institute of Management Accountants (IMA)

largest association of management accountants in the US and provides programs leading to the CMA certificate and the CFM certificate

Modern concept of controllership the controller exerts a force or influence that impels _______ managers toward making better decisions as they implement their strategies

line

Most organizations distinguish between __________ management and _________ management

line; staff

Scorekeeping

management accountants collect info to follow through on how actual performance compares to planned/ budgeted performance

Modern cost accounting takes the perspective that collecting cost info is a function of the __________ being made. Thus, the distinction between management accounting and cost accounting is _________

management decisions; not so clear-cut

Costs are collected by category such as _________, __________, and _________. These costs are then summarized to determine ______ by month, quarter, or year. The results are analyzed to evaluate, say, how costs have changed ________ to revenues from one period to the next

materials; labor; shipping; relative

Bottlenecks

occur when the work to be performed exceeds the available capacity

Management accountants calculate a target cost for a product by subtracting the ___________ per unit of product that the company thinks it can earn from the ___________

operating income; target price

The study of modern cost accounting yields insights into how managers and accountants can contribute to __________

operations

A _________ must be flexible enough so that managers can seize sudden opportunities unforeseen at the time it was formulated. In no case should control mean that managers ______ to a plan when unfolding events indicate that actions not encompassed by the plan would offer better results for the company

plan; cling

Marketing

promoting and selling products or services to customers or prospective customers

Controllership

provides financial info for reports to managers and shareholders and oversees the overall operations of the accounting system

Customer Service

providing after-sales service to customers

The cost-benefit approach is useful for making __________ decisions

resource-allocation

Investor Relations

responding to and interacting with shareholders

A decrease in demand could offset any increase in prices or rates and lead lower overall ___________

revenues

To calculate and manage the cost of products, the management accountant tries to understand the tasks or activities that causes costs to _________. They monitor the marketplace to determine prices that customers are _______ for products or services.

rise; willing to pay

The increasing pace of technological innovation has led to _________ product life cycles and the need for companies to bring new products to market more ______.

shorter; rapidly

Enterprise Resource Planning (ERP) Systems

single databases that collect data and feed into applications that support the company's business activities, such as purchasing, production, distribution, and sales

Strategy

specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives

Although budgets are primarily financial, managers use both financial and nonfinancial info to help implement their ______________

strategies

Companies can also implement strategy, cut costs, and create value by enhancing their ________--

supply chain

Increasingly, org.s are using ______ to achieve their objectives. Traditional distinction between line and staff have become _______ clear cut.

teams; less

The successful management accountant must have _______ and _______ competence as well as _________ and _______ skills.

technical; analytical behavioral; interpersonal

Budget

the quantitative expressions of a proposed plan of action by management and is an aid to coordinating what needs to be done to implement that plan

New Product Development Time

the time it takes for new products to be created and brought to market

Planning

this compromises selecting organizational goals, predicting results under various alternative ways of achieving those goals, deciding how to attain the desired goals, and communicating the goals and how attain them to the entire org.

Ideal Database

this consists of small, detailed bits of info that can be used for multiple purposes

Total Quality Management (TQM)

this encompasses designing the product or service to meet the wants and needs of customers, as well as marking products with zero (or minimal) defects and waste and with low inventories

Sometimes decisions managers make involve __________

tradeoffs

Companies gain if ___________ of the individual business functions of the value chain work concurrently as a team

two or more

Gathering info before making decisions helps managers get a better handle on the ____________

uncertainties

Management accountants track the costs incurred in each _________ category. Their goal is to reduce ________ in each category and to improve ________ . Cost info also helps managers make __________ tradeoffs

value-chain; costs; efficiency; cost-benefit

Management accountants serve as business partners in planning activities because of their understanding of what creates ________ and the key ________

value; success factors