Ch 1 Lecture - Web

8/3/2019 Ch 1 Lecture - Web

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Garrison 14e Chapter 1 Lecture

1. What is managerial accounting?a. Key differences between financial and managerial accountingi. _________________

1. Financial reports are for _________________ users2. Managerial reports are for _________________ users

ii. Emphasis on the ______________1. Financial summarizes past activities2. Managerial has a strong future orientation

iii. _______________________ of data1. Financial data should be objective and verifiable2. Managerial focuses on relevant data, even if not completely objectiveor verifiable

iv. __________ emphasis on _____________1. Financial focuses on precision when reporting to outsiders2. Managerial aids decision makers by providing

_______________________________________________

v. _________________ of organization1. Financial concerned with companywide reports2. Managerial focuses on segment reports: product lines, sales

territories, divisions, departments, etc.vi. No externally imposed rules

1. Financial accounting conforms to GAAP and IFRS2. Managerial accounting _______________________________ rather

looks at cost-benefit

vii. __________________________1. Financial is mandatory because outside parties require periodic

financial statements

2. Managerial not mandatory will it be useful in decision makingb. Managers have three main activities

i. _______________1. Establishing goals & specifying how to achieve them2. Accompanied by a _____________ - detailed plan for the future

usually expressed in formal quantitative terms

ii. ______________________


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1. Gathering _________________ to ensure plan is being properlyexecuted or modified as circumstances change

2. Includes preparing performance reports comparing budgeted toactual results to improve future performance

iii. _________________________1. Selecting a course of action from competing alternatives2. Decisions revolve around three questions

a. What should we be selling?b. Who should we be serving?c. How should we execute?

2. Why does managerial accounting matter to your career?a.______________ majors see Exhibit 1-3 page 6b.______________majors

i. More than 80% of professional accountants in US work in non-publicaccounting environmentsii. High likelihood that your future will involve working for a non-public

accounting employer

1. Will need strong financial accounting skills AND2. Will expect you to help improve organizational performance

(managerial accounting skills)

iii. Certified Management Accountant (CMA) designation globally respectedcredential

1. Exam complements CPA exam2. Focuses on planning, controlling & decision making skills3. www.imanet.org, 1-800-638-4427, or stop by instructors office

3. What skills do managers need to succeed?a._____________________________________

i. Strategy __________________ enabling company to attract customers bydistinguishing itself from competitors

ii. Customer value propositions1.______________________________ respond to individual

customer needs2._____________________________________ deliver products and

services faster, more conveniently, and at a lower price

3.___________________________ offer higher quality productsb.________________________________________

i. Process used by company to proactively identify risk it faces and managethose risks
http://www.imanet.org/http://www.imanet.org/http://www.imanet.org/


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ii. Most common risk management tactic is to reduce risks by implementingspecific controls see Exhibit 1-5 page 10

c. __________________________________i. Definitions

1.____________________ series of steps followed to carry out sometask in a business2._________________ major business functions that add value to

companys products and services

ii. __________________________ (Lean _________________ in nonmanufacturing sector)

1. Often called ___________________________ (JIT) productionproducts made in response to customer orders and completed just-in-

time to be shipped

2. Traditional manufacturing methods organize work departmentallyand encourage maximum output even if it exceeds customer demandand increases inventories

3. Lean thinking number of units produced tends to equal number ofunits sold

4. Lean approach results in fewer defects, less wasted effort, andquicker customer response times

iii. ________________________________ (TOC)1. Constraint or _____________________ is anything that prevents you

from getting more of what you wantthe step that has the smallestcapacity

2. TOC based on idea that effectively managing the constraint is key tosuccess generate more business rather than cutting workforce

3. Four-step approach to process improvementa. First, identify weakest link in chain the constraintb. Second, dont place a greater strain on the system than the

weakest link can handle

c. Third, concentrate improvement efforts on strengtheningweakest link

d. Fourth, move to the next weakest link once improvementefforts are successful

d.________________________________i. The question youre trying to answer defines how youll measure and how

you analyze it

1. Net income historical financial data that complies with rules2. How to serve customers non-financial, process-oriented data


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3. Will you need to borrow money estimate cash flowsii. Primary purpose of this course is to help you develop measurement skills

used by managers to support planning, controlling, and decision making

activities

e.______________________________i. Technical competence within your area of expertise and with respect tooperations outside your functional area of expertise

ii. Be a person of high integrityiii. Understand how to implement organizational changeiv. Have strong communication skillsv. Be capable of motivating and mentoring other peoplevi. Effectively manage team-based decision processes

4. Importance of _______________ in businessa. IMAs Statement of Ethical Professional Practice (Exhibit 1-9, page 16)i. Guidelines for ethical behavior

1.__________________2. Confidentiality3.__________________4. Credibility

ii. Guidelines for resolution of ethical conflict1. Follow organizations established policies for resolving ethical conflict2. If it doesnt work, work your way up the line of control (with

supervisors knowledgeassuming not involved), clarify relevantethical issues, consult an attorney

b. Why have ethical standards?i. If standards not followed in business, then economy and all of us would

suffer

ii. Failure to have good ethics can lead to lower standard of living with lower-quality goods and services, less to choose from, higher costs, and higher

prices

Documents

Ch 1 Lecture - Web