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Chapter 1-4

ACC410 Chapters 1-4 Textbook Notes

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ACC 410
Keith Whelan

Chapter 1The Role of Accounting Information in Ethical Management DecisionMaking y Managers use cost acc info to help make diff types of decisions including decisions related to developing organizational strategies creating operating plans and monitoringmotivating organizational performance y Uncertaintiesissuesinformation about which we have doubt ex the exact lvl of future sales for a product is uncertain y Biasespreconceived notions adopted without careful thought ex a manager who dislikes change might automatically reject a proposal that would alter operations and improve efficiencyBiases cause decision makers to ignore weaknesses in their preferred course of action and prevent them from adequately exploring alternatives y Decision Qualityrefers to the characteristics of a decision that affect the likelihood of achieving aoutcome uncertainty and bias reduce decision quality y The most farreaching decision managers make is to identifyshape the organizations vision y Organizational Visioncore purpose and ideology of the organization which guides the organizations overall direction and approaches toward its various stakeholder groups y Vision Statementtheoretical description of what the organization should become y Mission Statementhighlvl declaration of the organizations purpose y Core Values Statementsummary of the beliefs that define the organizations culture y Organizational Core Competenciesan organizations strengths relative to competitors y Organizational Strategiestactics managers use to take adv of core competencies while working toward the organizational vision y Operating Plansinvolve specific shortterm decisions that shape an organizations dayday activities such as drawing cash from a bank line of credit hiring an employee or ordering materials y Actual Operationsvarious actions taken and results achieved over a period of time they include customer orders received revenues earnedof employees hired costs incurred units of goodsservices produced cash receivedpaid and so on y Data about actual operations are collected and measured by the organizations IS and then used to monitormotivate performance y Cost accounting involves the process of tracingrecordinganalyzingdetermining the cost of an organizations projectprocessactivity it helps managers understand the costs of operating a business so they can use the cost information to make sound bus decisions particularly to reduce the companys cost and to improve its profitability and productivity y Management Accountingprocess of gathering summarizing and reporting financial and nonfinancial information used internally by managers to make decisions it is not bound by GAAP and it helps managers to plancontrolmeasure performance
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