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ACC 410 (34)
Chapter 1

Chapter 1

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Department
Accounting
Course
ACC 410
Professor
Vanessa Magness
Semester
Winter

Description
ACC410-011: Cost Management: Measuring, Monitoring, and Motivating Performance Chapter 1: The Role of Accounting Information in Ethical Management Decision- Making Management Decision Making: Uncertainties: issues and information about which we have doubt Biases: preconceived notions adopted without careful thought Decision Quality: characteristics of a decision that affect the likelihood of achieving a positive outcome Management Decision Making Organizational Vision: core purpose and ideology of the organizations, which guides the organization’s overall direction and approaches toward its various stakeholder groups • Purpose is to create value for stakeholders such as owners, donors, governmental, employees, customers/ clients, suppliers, community, society, and others. • Organization success increased when employees understand the organization vision and work collectively and achieve it Organizational Core Competencies: an organization’s strengths relative to competitors (in order to create value for stakeholders) • vision should build on existing and achievable strengths (ex: productivity, skills, knowledge, technologies, physical resources, customer/ supplier relationships, reputation, growth opportunities, legal rights, regularly advantages, financial resources) • vision might change over time and lead to re-examination of core competencies Organizational Strategies: tactics managers use to take advantage of core competencies while working toward the organizational vision • strategies guide long term decisions www.notesolution.com Operating Plans: involve specific short-term decisions that shape an organization’s day to day activities, such as drawing cash from a bank line of credit, hiring an employee, or ordering materials. Actual Operations: various actions taken and results achieved over a period of time (ex: customer orders received, revenues earned, etc) Management Control Systems: include planning, monitoring, and motivating, and controlling and measuring performance company’s vision -> strategy -> set goals, measures, targets -> planning -> decision making & implementation -> control and evaluation Cost Accounting: involves the process or tracing, recording, analyzing, and determining the cost of an organization’s project, process, or activity • helps managers understand the cost of operating a business so they can use the cost information to make sound business decisions (reduce company’s cost and to improve its profitability and productivity) Management Accounting and Financial Accounting Management accounting: process of gathering, summarizing, and reporting financial and nonfinancial information used internally by managers to make decisions (help managers plan, control, and measure performance) Financial Accounting: process of preparing and reporting financial information that is used frequently by decision makers outside the organization, such as shareholders and creditors Strategic Cost Management: simultaneous focus on reducing costs and strengthening an organization’s strategic position Balanced Scorecard: formal approach used to help organizations translate their vision into objectives that can be measured and monitored using both financial and nonfinancial performance measures Information Systems and Management Decision-Making Internal Reports: document that presents information for use only inside an organization (monthly sales summaries, analysis of a potential business acquisition) • evaluating and updating organizational strategies www.notesolution.com • communicating and monitoring operation plans • measuring, monitoring, and motivating performance External Reports: document that presents information for use outside an organization (ex: income tax returns) • government, stakeholders, and other stakeholders Business Intelligence Systems: the internet and BI software provide opportunities for managers to save costs and improve profitability in the following ways • integrating systems: throughout an organization, between an organization and its customers and suppliers • improving management of customer relationships, supply chains, work teams within an organization Improving Information and its use in Decision-Making mangers might use past sales information to predict future sales trends might use past costs to predict future costs expectations help them decide on the best organizational strategies and operating plans Types of Uncertainty: all business decisions are made under a cloud of
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