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Exam 1 Study Guide (aced the test and got 96%)

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Louisiana State University
ACCT 2101

Spring 2012Managerial Accounting 2101Exam 1 Knowledge GuideAll information in the text notes study guide and covered on Wiley Plus is eligible for testingListed below are the knowledge content areas that can be tested on Exam 1This is an 80 point examYou will have between 35 and 40 questionsAbout 50 of questions will be conceptual and 50 will be computationalQuestions can be worth 2 3 or 4 pointsAll questions will be in multiple choice formatThere are opportunities for partial points on some problemsWhile this list is intended to be a guide it may not constitute 100 of all materials covered on the examChapter 1 Managerial Accounting1Managerial vs Financial accounting2Managerial accountants functionsPlanning requires managers to look ahead and to establish objectives These objectives are often diverse maximizing shortterm profits and market share maintaining a commitment to environmental protection and contributing to social programs For example HewlettPackard in an attempt to gain a stronger foothold in the computer industry has greatly reduced its prices to compete with Dell A key objective of management is to add value to the business under its control Value is usually measured by the trading price of the companys stock and by the potential selling price of the companyDirecting involves coordinating a companys diverse activities and human resources to produce a smoothrunning operation This function relates to implementing planned objectives and providing necessary incentives to motivate employees For example manufacturers such as Campbell Soup Company General Motors and Dell must coordinate purchasing manufacturing warehousing and selling Service corporations such as American Airlines Federal Express and ATT must coordinate scheduling sales service and acquisitions of equipment and supplies Directing also involves selecting executives appointing managers and supervisors and hiring and training employeesThe third management function controlling is the process of keeping the companys activities on track In controlling operations managers determine whether planned goals are being met When there are deviations from targeted objectives managers must decide what changes are needed to get back on track Recent scandals at companies like Enron Lucent and Xerox attest to the fact that companies must have adequate controls to ensure that the company develops and distributes accurate information How do managers achieve control A smart manager in a small operation can make personal observations ask good questions and know how to evaluate the answers But using this approach in a large organization would result in chaos Imagine the president of Dell attempting to determine whether the company is meeting its planned objectives without some record of what has happened and what is expected to occur Thus large businesses typically use a formal system of evaluation These systems include such features as budgets responsibility centers and performance evaluation reportsall of which are features of managerial accounting3Organizational structureThe chief financial officer CFO is responsible for all of the accounting and finance issues the company faces The CFO is supported by the controller and the treasurer The controllers responsibilities include 1 maintaining the accounting records 2 maintaining an adequate system of internal control and 3 preparing financial statements tax returns and internal reports The treasurer has custody of the corporations funds and is responsible for maintaining the companys cash positionThe chief executive officer CEO has overall responsibility for managing the business Obviously even in a small business in order to accomplish organizational objectives
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