Introduction to Managerial Accounting (Chapter 1) Exam verified solutions and explanations.

Introduction to Managerial Accounting (Chapter 1) Exam verified solutions and explanations What is managerial accounting? - Correct Answers: Focuses on providing internal management with the information it needs to run a company efficiently and effectively. Managers 4 primary responsibilities - Correct Answers: -Decision Making -Planning -Directing -Controlling Planning - Correct Answers: Setting goals and objectives and how to achieve them Directing - Correct Answers: Overseeing day to day operations Controlling - Correct Answers: Evaluating results of operations against plans and making adjustments as needed Managerial accounting - Correct Answers: -Internal primary users -Plan,direct,control,decide purpose of information -Internal reports useful to management -Defined by management -Internal and external transactions, focus on future -Data must be relevant -Segments of the business -Depends on management needs for preparations -Internal audit -No requirement of information -Careful consideration on the impact of employee behavior Financial accounting - Correct Answers: -External -Users make investing and lending decisions -General purpose financial statements -Determined by GAAP -Information is based on historical transactions with external parties -Data must be reliable and objective -Company as a whole -Annually and quarterly preparation -External audit -SEC requires publicly traded companies to issue audited financial statements -Adequacy of disclosure Organizational Structure of a company - Correct Answers: Board of Directors~CEO~COO/CFO~Treasurer/Controller/Internal Audit~Audit Committee Changing Roles of Management Accountants - Correct Answers: -Impact of technology -Ensuring accurate financial records -Planning, analyzing, and interpreting accounting data -Providing decision support Required Skills of Managerial Accountants - Correct Answers: -Knowledge of financial and managerial accounting -Analytical skills (critical thinking) -Knowledge of how a business functions -Ability to work on a team -Oral and written communications skills Institute of Management Accountants (IMA) - Correct Answers: Professional association for management accountants. IMA's functions - Correct Answers: -Certification (CMA) -Practice development -Education -Networking -Ethical standards -Public education IMA Ethical Standards - Correct Answers: Competence, Confidentiality, Integrity, Credibility Ethical Behavior - Correct Answers: Means doing the right thing, regardless of consequences. Board of Directors - Correct Answers: Stockholders elect these to oversee the company. Chief Executive Officer - Correct Answers: Board of directors hire this person to manage the company on a daily basis. Chief Operating Officer - Correct Answers: Hired by the CEO to oversee the companies operations, such as research and development, production, or distribution. Chief Financial Officer - Correct Answers: Hired by CEO to oversee all of the companies financial concerns. Treasurer - Correct Answers: Reports to CFO and is responsible raising capital and investing funds. Controller - Correct Answers: Reports to CFO and is responsible for general financial accounting, managerial accounting, and tax reporting. Internal Audit - Correct Answers: They ensure the companies internal controls and risk management policies are functioning properly. Audit Committee - Correct Answers: Oversee the internal audit function as well as audits the financial statements by CPA's. Sarbanes-Oxley Act of 2002 (SOX) - Correct Answers: Restore trust in publicly traded cooperation, their management, their financial statements, and their auditors. Extensible Business Reporting Language (XBRL) - Correct Answers: Enables companies to release financial and business information in a format that can be quickly, efficiently, and cost-effectively accessed, sorted, and analyzed over the internet. Sustainability - Correct Answers: The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. Shifting Economy - Correct Answers: Economies have shifted away from manufacturing to service. International Financial Reporting Standards (IFRS) - Correct Answers: *Results of globalization -Consistent reporting standards needed worldwide -SEC is studying IFRS Enterprise resource planning (ERP) - Correct Answers: System that integrates a company's functions, departments, and data. Lean Operations - Correct Answers: A philosophy and business strategy of manufacturing without waste. Just in Time Inventory (JIT) - Correct Answers: Manufacture "just in time" to fill orders *Reduces -Raw materials inventory -Finished goods inventory -Storage costs -Handling costs (TQM) Total Quality Management - Correct Answers: Goal to provide customers with superior products and services.