[ACCT 20200] - Midterm Exam Guide - Comprehensive Notes for the exam (18 pages long!)

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7 Feb 2017
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ACCT 20200
MIDTERM EXAM
STUDY GUIDE
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Chapter 1: Managerial Accounting- An Overview
Section 1.3
Six business perspectives needed to enable intelligent planning, control, and decision
making:
o 1. Ethics Perspective
Maintains the integrity of business and acts as the lubricant of the
economy
Ethics= foundation of managerial accounting numbers must be
trustworthy
o 2. Strategic Management Perspective
Must develop a strategy, hih is a gae pla that eales a opay
to attract customers by distinguishing itself from competitors
Focal point of strategy= customers
Customer value propositions= the essence of strategy include
customer intimacy, operational excellence, and product leadership
o 3. Enterprise Risk Management Perspective
A process used by a company to identify those risks and develop
responses to them that enable it to be reasonably assured of meeting its
goals
o 4. Corporate Social Responsibility Perspective
A concept whereby organizations consider the needs of all stakeholders
when making decisions extends beyond legal compliance to include
voluntary actions that satisfy stakeholder expectations
o 5. Process Management Perspective
Business Process: a series of steps that are followed in order to carry out
some task in a business tasks often span departmental boundaries,
thereby requiring managers to cooperate across departments
Value Chain: consists of the major business functions that add value to a
opay’s poduts ad seies used to describe how an
ogaizatio’s futioal depatets iteat ith oe aothe to fo
business processes
BIG IDEA= communication across department and between managers is
essential for success
Lean Production: a management approach that organizes resources such
as people and machines around the flow of business processes and that
only produces units in response to customer orders aka just-in-time
o 6. Leadership Perspective
Must be able to unite the behaviors of fellow employees around two
common themes:
1. Pursuing strategic goals
2. Making optimal decisions
Intrinsic Motivation: motivation that comes from within us
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Extrinsic Motivation: incentives that can be used to highlight important
goals and to motivate employees
Cognitive Bias: distorted thought processes want to completely avoid
in business
Appendix
Corporate Governance: the system by which a company is directed and controlled
o Ehaes stokholdes’ ofidee that a opay is eig u i thei est
interests rather than in the interests of top managers
o If properly implemented, should provide incentives for the board of directors
and top management to pursue objectives that are in the interests of the
opay’s oes ad it should poide fo effetie oitoig of pefoae
Sarbanes-Oxley Act of 2002: intended to protect the interests of those who invest in
publicly traded companies by improving the reliability and accuracy of corporate
financial reports and disclosures
o Six key aspects of this legislation designed to help reduce the incidence of
fraudulent financial reporting:
1. Requires that both the CEO and CFO certify in writing that their
opay’s fiaial stateets ad aopayig dislosues faily
represent the results of operations jail time on the line
2. Established the Public Company Accounting Oversight Board to provide
additional oversight over the audit profession
3. Places the power to hire, compensate, and terminate the public
aoutig fi that audits a opay’s fiaial epots i the hads of
the audit committee of the board of directors all members of
committee must be INDEPENDENT
4. Places important restrictions on audit firms prohibits a public
accounting firm from providing a wide variety of nonauditing services to
an audit client
5. Reuies that a opay’s aual epot otai a internal control
report designed to provide
assurance to investors that
financial disclosures are reliable
6. Establishes severe penalties of
as many as 20 years in prison for
altering or destroying any
documents that may eventually
be used in an official proceeding
and as many as 10 years in prison
for managers who retaliate
against a so-called whistle-blower
who goes outside the chain of
command to report misconduct
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