copyright ©2008 prentice hall. all rights reserved 1-1 introduction to managerial accounting...

Introduction to Managerial Accounting

Chapter 1

Objective 1

Identify managers’ four primary responsibilities

Setting goals and objectives

Overseeing day-to-day operations

Evaluating resultsof operations

Managers’ Responsibilities

Directing

Controlling

DecisionMaking

Planning

Objective 2

Distinguish financial accounting from managerial accounting

Managerial vs Financial Accounting

Issue Managerial Financial

Primary Users Internal External

Purpose of Information

Plan, Direct, Control, Decide

Users make investing and lending decisions

Primary Accounting Product

Internal Reports useful to Management

General Purpose Financial Statements

What is included?

Defined by Management

Determined by GAAP

Underlying Basis of Information

Internal and External Transactions, focus on future

Based on historical transactions with external parties

Emphasis Data must be relevant

Data must be reliable and objective

Business Unit Segments of the business

Company as a whole

Preparation Depends on management needs

Annually and Quarterly

Verification Internal audit External audit

Information Requirements

No requirement SEC requires publicly traded companies to issue audited financial statements

Impact on employee behavior

Careful consideration

Adequacy of disclosure

a. Companies must follow GAAP in their ____________________ systems.

b. Financial accounting develops reports for external parties, such as __________ and _______________.

c. When managers evaluate the company’s performance compared to the plan, they are performing the __________ role of Management.

financial accounting

controlling

What type of users outside of

the company might utilize

financial information?

d. __________ are decision makers inside a company.

e. ___________________ provides information on a company’s past performance to external parties.

f. ______________________ systems are not restricted by GAAP but are chosen by comparing the costs versus the benefits of the system.

Managers

Financial accounting

Managerial accounting

g. Choosing goals and the means to achieve them is the __________ function of management.

h. _____________________ systems report on various segments or business units of the company.

i. ____________________ statements of public companies are audited annually by CPAs.

planning

Managerial accounting

Financial accounting

Objective 3

Describe organizational structure and the roles and skills required of management

accountants within the organization

Organizational Structure

Board of Directors

Chief Executive Officer

Chief Operating Officer

Chief Financial Officer

Vice Presidents of various operations

Treasurer Controller Internal Audit

Audit Committee

Board of Directors

Chief Executive Officer

Chief Operating Officer

Chief Financial Officer

Vice Presidents of various operations

Treasurer Controller Internal Audit

Audit Committee

Changing Roles of ManagementAccountants

• Ensuring accurate financial records Helping to design information systems Recording non-routine transactions Making adjustments to financial records

• Planning, analyzing, and interpreting accounting data

• Providing decision support

Required Skills

• Knowledge of financial and managerial accounting

• Analytical skills

• Knowledge of how a business functions

• Ability to work on a team

• Oral and written communications skills

a.The _____ and the _____ report to the CEO.

b.The internal audit function reports to the CFO or _______ and the _____________.

c. The __________ is directly responsible for financial accounting, managerial accounting, and tax reporting.

d.The CEO is hired by the______________.

CFO COO

CEOcontroller

audit committee

Board of Directors

e. The __________ is directly responsible for raising capital and investing funds.

f. The __________ is directly responsible for the company’s operations.

g. Managerial accountants often work with __________________________.

h. The subgroup of the board of directors is called the _________________.

treasurer

audit committee

Management accountants

have many skills and need to be

able to work with all areas in the

company.

Objective 4

Describe the role of the Institute of Management Accountants (IMA) and use its ethical standards to make reasonable

ethical judgments

• Professional association for management accountants

• Goal Advance Managerial accounting profession through

• Certification• Practice Development• Education• Networking

• Certifications Certified Management Accountant (CMA) Certified Financial Managers (CFM)

Summary of Ethical Standards Management Accountants must comply with Four Ethical Standards

Maintain Professional COMPETENCE

Preserve CONFIDENTIALILTY

of Information

Uphold INTEGRITY Perform Duties with CREDIBILITY

Steps to Resolve Ethical Dilemmas

• Follow company’s policies for reporting unethical behavior

• If not resolved Discuss with immediate supervisor Discuss with objective advisor/IMA Ethics

counselor Consult an attorney

a. The ______ is the professional association for management accountants.

b. The institute offers two types of certification – the _____ and _____.

c. The __________ exam focuses on managerial accounting topics, economics, and business finance.

CMA CFM

d. The ______ exam focuses on financial statement analysis, business valuation, risk management, working capital policy, and capital structure.

e. The institute’s monthly publication, called ________________, addresses current topics of interest to management accountants.

Strategic Finance

f. The institute says that approximately _____ percent of accountants work inside of organizations, rather than at CPA firms.

Objective 5

Discuss trends in the business environment

CEO and CFO - responsible for financial

statements, internal control system,

procedures for financial reporting

Audit committee – independent and should include a financial expert

CPA firms – limited non-audit services for

audit clients and periodic quality

review

Stiffer penalties for white-collar crimes

Sarbanes-Oxley Act of 2002

Current Trends

• Shifting economy• Competing in global marketplace• Time-based competition

Advanced Information Systems E-Commerce Just-in-Time Management

• Total Quality Management• ISO Certification• Cost Benefit Analysis

Objective 6

Use cost-benefit analysis to make business decisions

1. What are the total costs of adopting JIT?

Employee training $13,500Streamline production process 37,000Supplier identification 8,000Total costs $58,500

2. What are the total benefits of adopting JIT?

Savings in warehouse expenses $97,000Lower spoilage costs 46,000Total benefits $143,000

3. Should Wild Rides adopt JIT? Why or why not?

Expected total benefits $143,000Expected total costs (58,500)Excess of benefits over costs $ 84,500

Wild Rides should adopt JIT because the expected benefits exceed the costs.

End of Chapter 1

copyright ©2008 prentice hall. all rights reserved 1-1 introduction to managerial accounting...

prentice hall

rights reserved1

rights reservedcopyright

financial information

managerial accountingchapter

managerial accountingcopyright

external transactions

external partiesemphasisdata

Documents

solutions manual for managerial accounting 3rd edition by...

managerial economics -...

1 managerial economics an analysis of business issues howard...

chapter 1 - introduction to managerial...

chapter 10 2000 by prentice hall. 10-1 information systems...

chapter 1-1. chapter 1-2 chapter 1 managerial accounting...

meeting notice...l. mcgrath e. h. (201 1), basic managerial...

copyright © 2010 pearson education, inc. publishing as...

chapter 4 organizational and managerial issues in logistics...

copyright © 2005 prentice-hall chapter 1 management skills...

managerial economics -1[1]

chapter 1-1 welcome to seminar #2. chapter 1-2 chapter 1-3...

© prentice hall 2002 6.1 chapter 6 managerial support...

managerial communication 1

managerial expertise[1]

managerial economics2[1]

chapter 1-1 chapter 1 managerial accounting managerial...

copyright © 2011 pearson education, inc. publishing as...

1 managerial economics. 2 managerial + economics managerial...

chapter 11 managerial communication and information...