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Midterm

MIDTERM 1: Chapter 1-4
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Department
Accounting
Course
ACC 406
Professor
Vincent Cappelli
Semester
Summer

Description
Midterm 1 ReviewChapter 1Introduction to Management Accounting What is Managerial Accounting managerial accounting is providing information for a companys internal users it is the firms internal accounting system it is designed to support the information that managers need it is not bound by any formal criteria such as GAAP or IFRS International Financial Reporting Standards managerial accounting has 3 basic objectives 1 Provide information for planning the organizations actions 2 Provide information for controlling the organizations actions 3 Provide information for making effective decisionsInformation Needs for Planning Control and Decision Making managerial accounting information is needed by a number of individuals in particular managers and empowered workers need comprehensive up to date information for the following activitiesPlanning requires setting objectives and identifying methods to achieve those objectivesEX a firm may set the objectives of increasing its short term and long term profitability by improving the overall quality of its productsControlling monitoring a plans implementation and taking corrective actions usually achieved by comparing actual performance with expected performanceEX managers may decide to let the plan continue as is take corrective action of some type to put the action back with the original planDecision Making process of choosing alternativesManagers cannot successfully plan or control the organization actions without making decisions regarding competing alternativesComparison of Managerial and Financial Accounting there are two kinds of accounting information systemsFinancial AccountingManagerial AccountingManagerial Accounting internal focus such as managers executives and workers there are no rules financial and non financial information deals with future strongly emphasizes information about future events it is broadFinancial Accounting external focus such as investors creditors customers suppliers and government must follow GAAP rules objective financial information it deals with historical orientation records and reports events that happened not as broad as managerial accounting self containedValue Chain refers to the set of business functions that add value to an organizations products or services for a company to succeed all stages of the value chain add value to the final product value chain is a systematic approach to examine the development of a firms competitive advantage when value is built into each stage of a product or service this increases the total value delivered by the organization value chain includesDesignDevelopProduceMarketDeliver management accountants play a key role in delivering all value chain functions they provide estimated revenue and cost data for each stage of the products lifeThe Role of the Managerial Accountant managerial accountants must support management in all phases of business decision making as specialists in accounting they must be intelligent well prepared up to date with new developments and familiar with the customs and practices of all countries in which their firms operateStructure of the Company role of managerial accountants in an organization is one of support they assist individuals who are responsible for carrying out organizations basic objectives structure of company includesLine Position position that have direct responsibility for the basic objectives of an organizationEX vice presidents of manufacturing and marketing factory managers and assemblersStaff Position position that are supportive in nature and have only indirect responsibility for an organizations basic objectiveEX vice presidents of finance and human resources the cost accountant and the purchasing manager Controller the controller is often viewed as a member of top management team and is encouraged to participate in planning controlling and decision making activities controller has responsibility for both internal and external accounting requirementsTreasurer is responsible for the finance position specifically the treasurer raises capital and managers cash and investments treasurer may also be in charge of credit collection and insuranceManagerial Accounting Ethical Conduct and Social Responsibility objective of profit maximization should be constrained by the requirement the profits be achieved through legal and ethical means this has always been an implicit assumption of managerial accounting the assumption should be made explicit
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