Book: Intro Flashcards
Why do managers need accounting
They need data to back up their decision and control activities. T.ex prices, costs, demands and profitability of different products and services.
Who is management accounting for
Internal users, managers as opposed to external stakeholders
Is management accounting legally required
No, it should only be produced when it is profitable.
Does management accounting report on the entire organization
No, it segments the business into departments, individual customers and projects and checks their costs, profitability and other metrics
Is management accounting standardized
No, not at all since ti does not need to be. Since internals only look at their own it can be optimized.
Does management accounting feature forecasts
Yes,
Does management accounting prioritize timeliness or accuracy
Timeliness, managers prefer rough information over late information
Describe the decision making process
Identify objectives, evaluate alternatives, implement chosen action, compare forecasts with reality, continue or reevaluate. Can be divided into planning and control process.
Provide three examples of business decisions that management accountants could be of assistance in.
When choosing between new projects to start, when choosing which projects to terminate and when choosing which customers to prioritize.
Why maximize profits
Managers are legally bound to act in behalf of owners that want returns, the invisible hand and more profit means greater means for the business.
What ate some alternative motives outside profits.
Pride, power, security and sustainability
What is meant by product development
Developing new products for existing markets
What is meant by market development
To develop new markets for existing products
What is meant by business diversification
To develop new products for new markets
What might managers consider when choosing between alternative courses of action
Potential contributor to growth rates, market share and profit
