Unit 1 - CHAP 1 - 4 Flashcards
(50 cards)
How was management accounting used in history?
as a business communication tool, translating raw data into financial results to be assessed and compared
Pacioli, the father of accounting, in 1949 created….
the double entry system/method
What is management accounting?
he process of taking financial info and non-financial info from an organization and using it to make short term and strategic long term decisions to help the organization reach its goals
what are the three components of management accounting?
-recording and evaluating costs
-developing info to support planning and control systems
-developing, implementing and operating performance measurement and evaluation systems
What is Cost accounting?
approaches and methods for developing cost information (such as the cost of a product or a unit of service)
who is generally the decision maker in the organization?
the board of directors, if no board the owners/shareholders
who is in charge of managing the day to day business in an org?
the CEO; they manage the organization and its managers
who are considered line employees?
employees directly involved in the revenue-generating activities of the org
who are considered administrative employees?
back end support staff; admin, cpa’s, etc
what is corporate governance?
the activities undertaken to control and direct an organization. These are usually divided among the board of directors
examples of corporate governance
-setting the strategic direction
-ensure org is fulfilling its responsibilities to its primary stakeholders
-identify ways to ensure timely and effective decision making
-implement controls to act ethically, legally and transparent with stakeholders in mind
-communication between shareholders, managers and employees
What is the role of management accounting?
planning, directing and controlling
what is involved in the process of planning?
identifying the organizations objectives and goals, and then developing and implementing a strategy to achieve them
what is the role of directing?
keeping the daytoday operations of the organization running effectively and efficiently. This involves hiring employees, providing direction and insuring tasks are done
Directing is focused on measuring results to determine whether the organization was able to implement its strategies.
what is the process of controlling?
the process of measuring the results of actions associated with the chosen strategy and amending actions to ensure the organization achieves its objectives
Control involves establishing performance standards, measuring actual performance, and taking corrective action as needed to ensure objectives are achieved.
what does relevance mean?
both internal and external sources are used to compile relevant info
what does timeliness mean?
relevant in its timeliness of that information
what does faithful representation mean
accuracy is key. dollar amount must be accurate to ensure proper control of cash, so the book balances align with the bank balance
what are the key skills required of management accounting
- attention directing
- problem solving
- communication
what is the triple bottom line?
people, planet, profits
What is corporate social responsibility
making sure all stakeholders are considered and no personal/professional bias takes place
what are the different Bias’s
- management bias
- income bias
- management accounting: estimates, pricing, costing, rev, inventory balances, profits
describe the key components/steps in the CPA way - “The code”
- assessing the situation
- analyzing an ethical issue
- concluding and advising
why are ethics important in management accounting
To ensure accurate financial reporting and decision-making