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ACG 2071 Exam 1 Ch. 1-4 (1)
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ACG 2071 Exam 1 Ch. 1-4 (1)
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ACG 2071 Exam 1 Ch. 1-4Managerial Accounting (Cost Accounting) - ANS-the gathering and preparing of accounting
information that is used within a company to help ensure the organization's goals are met
effectively and efficiently
Functions of Managerial Accounting - ANS-1. planning-we set goals and lay out how we are
going to accomplish those goals
2. directing-we make decisions about our daily operations
3. controlling-we compare actual results to what we had planned (budgeted) and make
changes/adjustments accordingly
Price - ANS--how much money the consumer pay(s) for the product
Cost - ANS--how much money the producer pay(s) for the product
Financial Accounting Vs. Managerial (Common Test Question) - ANS-Key components of
Managerial:
-mainly internal users
-planning, directing, and controlling (main purpose)
-produces internal reports
-format is based on managers needs-do things as they see fit
-they focus on data from past, present, and mostly future
-relevance of data is what matters
-prepared as needed by management
-they look at segments or divisions of company
-can be qualitative/quantitative data
-measured any way management needs
-internal audits
Sustainability - ANS-defined as the ability to meet the needs of the present without
compromising the future
Three main pillars:
-Social (people)
-Environment (planet)
-Economic (profit)
Sarbanes-Oxley Act of 2002 [SOX] - ANS--was passed to restore public trust in the markets as
a result of a number of accounting scandals including Enron, WorldCom, Arthur Anderson, etc
-required that executives of the company (CFO & CEO) sign off on the financial statements as
correct and accurate
, -if there was fraud discovered the excuse of "I didnt look over the financial statements... I just
signed them" would no longer protect folks from liability
International Financial Reporting Standards [IFRS] - ANS--rose out of globalization and
investors needs to be able to compare and interpret financial statements from different countries
-Securities and Exchange Commission (SEC) researches the IFRS
Extensible Business Reporting Language [XBRL] - ANS--a system designed to make accessing
financial data much quicker and easier
-XBRL uses a system of tagging financial data that can then be used later to generate custom
reports based on tagged data
Integrated Reporting [<IR>] - ANS-a relatively new process that results in communication and
an integrated report
Enterprise Resource Planning [ERP] - ANS--an integration of department functions and data to
streamline operations and allow for quicker responses when things change
-essentially aggregates (puts together) tons of accounting information
Total Quality Management [TQM] - ANS--the goal of TQM is to be badass in every aspect of
operations -providing superior products and services to your customers
-just in time inventory (JIT)- reduces storage
costs, waste, as well as inventory costs
-ISO 9001:2008-international quality
management standards/guidelines
Service Companies - ANS--do not produce any goods-provide a service
-example: accountants, lawyers, consultants
*these companies have NO inventory accounts
Merchandising Companies - ANS--do not produce any goods-they resell other manufactured
goods
-examples: khols, dillards, target
*these companies have ONE inventory Account
Manufacturing Companies - ANS--produce a finished good by taking raw materials and
converting them into a finished product, using labor and overhead
-examples: Nike, Honda, Lego, etc
-These companies have THREE inventory accounts: raw materials, WIP, and Finished Goods
Direct Costs - ANS--cost that can be traced directly/easily to a cost object
-ex: a Mac computer-plastic, electronics, glass, etc
Indirect Costs - ANS--a cost that cannot be traced directly to a cost object (but still matters)
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