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ACCT 306 > Ch. 1 > Flashcards

Ch. 1 Flashcards

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1
Q

Accounting systems are used for?

A

To record economic events and transactions such as sales and materials purchases and process the data into information helpful to managers etc

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2
Q

Processing any economic transaction means what?

A

Collecting, categorizing, summarizing and analyzing

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3
Q

Costs are collected by category such as

A

Materials, labor and shipping

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4
Q

Accounting systems also provide information found in the firms

A

Income statement

Balance sheet

Statement of cash flow

Performance reports

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5
Q

Managers use I/S, B/S, statement of cash flows and performance reports to do what?

A

Make decisions about the activities, businesses or functional areas they oversee

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6
Q

Databases

A

Stores information in a way that allows different managers to access the information they need

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7
Q

ERP system is a

A

Single database

That collects data

And

Feeds them into applications that support

A company’s business activities such as purchasing, production, distribution and sales

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8
Q

Financial accounting

A

Focuses on reporting financial

information to external parties

such as investors, gov agencies, banks and

supplies based on GAAP

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9
Q

What is the most important way for financial accounting information to affect managers decisions and actions?

A

Through compensation which is

often in part based on numbers in

financial statements

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10
Q

Management accounting

A

Process of measuring, analyzing

and reporting financial and non

financial information that helps managers make

decisions to fulfill the goals of an

organization

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11
Q

Managers use management accounting information to?

A

1) develop, communicate and

Implement strategies

2) coordinate product design, production and

marketing decisions and evaluate

a company performance

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12
Q

Which type of accounting information and reports do not have to follow a set of principles or rules?

A

Management accounting

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13
Q

What are the key questions in management accounting?

A

1) how will this info help managers do their jobs better?

2) do the benefits of producing this info exceed costs?

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14
Q

Reports are common to both management accounting and financial acct?

True or false?

A

True

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15
Q

Cost acct provides info to both what?

A

Management and financial

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16
Q

What is the process of cost accounting?

A

Measuring, analyzing and

reporting financial & non financial

info related to costs of acquiring or using

resources in an organization

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17
Q

Most accounting professionals take the perspective that cost information is a part of?

A

Management acct info collected

to make management decisions

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18
Q

Cost management

A

Describes the activities managers

undertake to use resources in a

way that increases a product’s value to

customers and achieves an organizations goals

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19
Q

Cost management is not onl about reducing costs.

True or false?

A

True

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20
Q

Costs management also includes what? To incur additional costs?

A

Making decisions

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21
Q

Information from acct systems help managers to manage costs but the info and accounting systems themselves are not ?

A

Cost management

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22
Q

A company’s strategy specifies what?

A

How the organization matches its

Own capabilities w/ opportunities

In the marketplace

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23
Q

In other words strategy describes how an organization will

A

Compete & the opportunities it’s managers seek and pursue

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24
Q

The two broad strategies are

A

1) cost leadership strategy –>

Provide quality product or

services at low prices and managing costs

2) product differentiation strategy –> generate

profits & growth bc they offer differentiated or

unique products or services that appeal to

customers and often priced higher than the

less popular product or services of competitors

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25
Management accountants work closely with who to formulate what?
With managers in various departments to formulate strategies by providing info about sources of competitive advantage such as 1) company's cost, productivity or efficiency advantage relative to competitors 2) premium prices a company can charge relative to the costs of adding features that make its products or services distinctive
26
What is strategic cost management?
Describes cost management that specifically focuses on strategic issues
27
Management accounting information helps managers formulat strategy by answering the following ?'s Page 5
Page 5
28
What is the value chain?
Sequence of business functions by which a product is made progressively more useful to customers
29
Research and development (R&D)
Generating and experimenting with ideas related to new products , services or processes
30
Design of products and processes
Detailed planning, engineering & Testing of products and processes
31
Production
Procuring, transporting and storing (inbound logistics) and coordinating and assembling (operations) resources to produce. Product or deliver a service
32
Marketing (including sales)
Promotes & sells products or Services to customers or prospective customers
33
Distribution
Processing orders & shipping Products or services to customers
34
Customer service
Providing after sales service to customers
35
Administration function is included within
Primary functions
36
Administration function includes
Accounting & finance Human resource management Info technology & Supports 6 primary business functions
37
Each business is essential to companies satisfying who?
Their customers and keeping them satisfied and loyal over time
38
Customer relationship management (CRM)
A strategy that integrates people and technology in all business functions to deepen relations with customers, partners & distributors
39
Companies gain (in terms of cost, quality, &; the speed with which new products are developed)
If 2 or more of individual business functions of value chain work concurrently as a team
40
Managers track the cost incurred in each. Value chain category True or false?
True
41
What is the goal of managers when tracking costs incurred in each value chain category?
Reduce costs and improve efficiency
42
Production and distribution of the value chain is referred as the ?
Supply chain
43
Supply chain describes
The flow of goods, services & info from initial sources of materials & services to delivery of products to consumers regardless of whether those activities occur in 1 organization or in multiple organizations
44
Part of cost management emphasizes what?
Integrating & coordinating activities Across all companies in supply chain to improve their performance & reduce costs
45
Customers want companies to use value chain & supply chain to deliver ever improving levels of performance when it comes to several or all of the following:
1) . Cost and efficiency 2) . Quality 3) . Time 4) . Innovation 5) sustainability
46
1) cost and efficiency
- face continuous pressure to reduce cost of products | - to calculate & manage cost of products, must understand activities that cause costs to arise
47
How does management acct info help managers calculate a target cost for a product?
By subtracting from target price the operating income per unit of product that a company wants to earn
48
How do managers achieve target cost?
By eliminating some activities (such as rework) and reduce costs of performing activities on all value chain functions from initial R&;D to customer service
49
2) quality
- total quality management (TQM) is continuously improving the quality of products and processes
50
Managers who implement TQM believe what?
Each and every person in the value chain is responsible for delivery products and services that exceed customers expectations
51
Managers use management accounting information to evaluate costs and revenue benefits of TQM initiatives True or false?
True
52
Using TQM, companies design products and services to meet
Customer needs and wants, to make these products with zero (or very few) defects and waste & to minimize inventories
53
3) Time
- two important dimensions: new product development time and customer response time
54
New product development time
Is the time it takes for companies to create New products and bring them to market
55
Customer response time
Describes the speed at which an organization responds to customer requests
56
To deliver a product on time what do managers need to increase?
Capacity of machine to produce more output
57
Management accounting info can help managers quantify
Costs and benefits of doing so
58
4) innovation
- constant flow of innovative products or services is basis of an ongoing success of company
59
Who does managers rely on to evaluate alternative investment and R&D decisions?
Management accounting information
60
5) Sustainability
Is the application of cost and efficiency, quality, time and innovation to promote sustainability Which is the development & implementation of strategies to achieve long term financial, social and environmental goals
61
Sustainability is important
1) more & more investors care 2) companies find that sustainability goals attract and inspire employees 3) customers prefer products of companies with good sustainability records and boycot companies with poor sustainability records 4) sustainability performance of firms is monitored by societ & activist nongovernmental organizations & take action when their is a violation of environmental laws which
62
Who helps managers track the key success factors of their firms as well of their competitors ?
Management accountants
63
Competitive info serves as a benchmark managers use to what?
Continuously improve their operations
64
Decision making, planning and control: the five step decision making process
1. Identify the problem and uncertainties 2. Obtain information 3. Make predictions about the future 4. Make decisions by choosing among alternatives 5. Implement the decision, evaluate performance and learn
65
Steps 1-4 of the 5 step decision making process is referred to
Planning
66
Planning
Consist of selecting an organizations goals and strategies, predicting results under various alternative ways of achieving those goals , deciding how to achieve desired goals and communicating the goals and how to achieve Ithem to the entire organization
67
What is the most important planning tool when implementing strategy?
Budget
68
Budget
Quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan
69
Control
Comprises taking actions that implement the planning decisions, evaluating past performance and providing feedback and learning to help future decision making
70
What are the 3 guidelines that help management accountants provide the most value to strategic & operational decision making of their companies
1. Employ a cost benefit approach 2. Five full recognition to behavioral and technical considerations 3. Use different costs for different purposes
71
When is the cost benefit approach used?
When managers continually face L resource allocation decisions such as whether to purchase a new software package or hire a new employee
72
When should managers spend the resources?
If only the expected benefits to the company exceed the excepted costs
73
Technical considerations helps managers make?
Wise economic decisions by providing them with the desired info in an appropriate format and at the preferred frequency
74
How do budgets have a behavioral effect?
By motivating and rewarding employees for achieving an organizations goals
75
Line management
Such as production, marketing, and distribution management is responsible for achieving goals of the organization
76
Staff management
Such as a management accountants and information technology and human resources management provides advice, support and assistance to line management
77
CFO (Chief financial officer)
Also called finance director Responsible for overseeing the financial operations of an organization
78
Controllership
Provides financial info for reports to managers & shareholders and oversees the overall operations of an accounting system
79
Treasury
Oversees banking & short and long term financing, investments and cash management
80
Risk management
Manages financial risk of interest and exchange rate changes and derivatives management
81
Taxation
Plans income, sales and international taxes
82
Investor relations
Communicates with, responds to and interacts with shareholders
83
Strategic planning
Defying strategy and allocating resources to implement strategy
84
Controller (also called chief accounting officer))
Is the financial executive primarily responsible for management and financial accounting
85
Management accountants must work well in
Cross functional teams and as a business partner
86
Management accountants must raise tough questions for managers to consider especially when preparing budgets True or false?
True
87
Management accountants must do the following
1. Management accountants must work well in Cross functional teams and as a business partner 2. Management accountants must raise tough questions for managers to consider especially when preparing budgets 3. They must lead & motivate people to change and be innovative 4. They must communicate clearly, openly and candidly 5. They must have a strong sense of integrity
88
Ethics is the foundation of a well functioning
Economy
89
Sarbanes oxley was passed inresponse to
Series of corporate scandals
90
Sarbanes Oxley was s designed to
Improve internal control, corporate governance, monitoring of managers & disclosure practices of public corporations
91
Part of sarbanes, CEO AND CFO must do what?
Certify that the financial statement fairly represent the results of their operations
92
Sarbanes also authorizes PCAOB to do what?
Oversee, review and investigate the work of auditors

ACCT 306 (4 decks)

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