Managerial Accounting

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Questions and Answers

What is activity accounting?

A method for financial audit

A budgeting technique

The collection of financial or operational performance information about significant activities in an enterprise (correct)

A system for managing investments

What does an activity-based costing (ABC) system do?

It assigns overhead costs to products or services through a two-stage procedure.

Define activity-based management (ABM).

Using an activity-based costing system to improve the operations of an organization.

What is the role of the attention-directing function in managerial accounting?

It points out to managers issues that need their attention. Signup and view all the answers

What is balanced scorecard used for?

It evaluates business performance by balancing financial and operational measures. Signup and view all the answers

Who is a Certified Management Accountant (CMA)?

An accountant who has earned professional certification in managerial accounting. Signup and view all the answers

What is the role of a chief financial officer (CFO)?

An organization's top managerial and financial accountant. Signup and view all the answers

The constant effort to eliminate waste is known as ___ improvement.

continuous Signup and view all the answers

What does the controller do?

Supervises the accounting department and assists management in using managerial-accounting information. Signup and view all the answers

What is a cost accounting system?

Part of the basic accounting system that accumulates costs for managerial and financial accounting. Signup and view all the answers

Define cost driver.

A characteristic of an activity or event that results in the incurrence of costs. Signup and view all the answers

What is the purpose of a cost management system (CMS)?

To measure costs, identify non-value-added costs, and improve organizational performance. Signup and view all the answers

What does employee empowerment involve?

Encouraging and authorizing workers to improve operations, reduce costs, and improve quality. Signup and view all the answers

What is the focus of financial accounting?

Reporting accounting information to parties outside the organization. Signup and view all the answers

What does an internal auditor do?

Reviews accounting procedures, records, and reports. Signup and view all the answers

What is the just-in-time (JIT) inventory and production management system?

A system where no materials are purchased and no products are manufactured until needed. Signup and view all the answers

What are line positions?

Positions held by managers directly involved in providing goods or services. Signup and view all the answers

What is managerial accounting?

The process of identifying, measuring, analyzing, interpreting, and communicating information. Signup and view all the answers

Define non-value-added costs.

Costs of activities that can be eliminated without deterioration of product quality. Signup and view all the answers

What are staff positions?

Positions held by managers only indirectly involved in product or service production. Signup and view all the answers

What is strategic cost management?

Recognizing and managing cost relationships among activities in the value chain. Signup and view all the answers

What is the theory of constraints?

A management approach that focuses on identifying and relaxing limitations to goal attainment. Signup and view all the answers

What does total quality management (TQM) focus on?

Providing products or services that best satisfy the customer. Signup and view all the answers

What is the role of a treasurer?

Managing relationships with investors and creditors and maintaining custody of cash and assets. Signup and view all the answers

Define value chain.

An organization's set of linked, value-creating activities. Signup and view all the answers

Study Notes

Key Concepts in Managerial Accounting

Activity Accounting: Involves collecting financial or operational performance data on significant enterprise activities.
Activity-Based Costing (ABC) System: Two-stage process assigning overhead costs to products based on resource consumption and activity cost pools, with subsequent allocation to product lines via cost drivers.
Activity-Based Management (ABM): Utilizes ABC systems to enhance organizational operations and effectiveness.
Attention-Directing Function: Refers to managerial accounting's role in highlighting issues requiring managerial focus.
Balanced Scorecard: A performance evaluation model that integrates metrics on financial health, internal processes, innovation, and customer satisfaction.

Professional Roles

Certified Management Accountant (CMA): Credential for accountants specializing in managerial accounting.
Chief Financial Officer (CFO): Top financial executive overseeing an organization's financial operations.
Controller: Senior financial accountant managing the accounting department and supporting management with managerial insights.

Continuous Improvement and Organizational Efficiency

Continuous Improvement: Ongoing effort to enhance processes by reducing waste, improving quality, and increasing efficiency.
Cost Accounting System: Framework for collecting cost data for managerial and financial accounting purposes.
Cost Driver: Activity characteristics that lead to cost incurrence, crucial for identifying cost allocation.

Enhancing Performance and Reducing Costs

Cost Management System (CMS): System focused on measuring significant activity costs and identifying non-value-added expenses to enhance performance.
Employee Empowerment: Encouraging staff to take initiative in improving operations, focusing on cost reduction and quality enhancement.
Non-Value-Added Costs: Expenses from activities that do not contribute to product quality or value and can be eliminated.

Accounting Functions and Methodologies

Financial Accounting: Reporting of accounting information aimed at external stakeholders.
Internal Auditor: Accountant reviewing internal procedures and reports within the organization.
Just-in-Time (JIT) System: Inventory approach where materials and products are acquired only as needed, minimizing holding costs.

Organizational Structure

Line Positions: Roles directly involved in producing goods or services aligned with organizational goals.
Staff Positions: Managerial roles indirectly involved in production, supporting line positions.

Strategic Management Approaches

Strategic Cost Management: Understanding and managing cost relationships within the value chain to gain competitive advantage.
Theory of Constraints: Focuses on identifying and alleviating the limitations that hinder organizational goal achievement.
Total Quality Management (TQM): Comprehensive approach prioritizing customer satisfaction through quality-focused processes across the organization.

Value Chain Dynamics

Value Chain: Series of interconnected activities that add value to products and services from initial raw materials to final delivery to customers.

Financial and Asset Management

Treasurer: Accountant in charge of managing relationships with investors, creditors, and overseeing the organization's cash and assets.

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Description

Test your knowledge of key concepts in Managerial Accounting with this Chapter 1 Flashcard quiz. Learn important terms such as activity accounting and activity-based costing (ABC) systems through engaging definitions and examples.

Managerial Accounting - Chapter 1

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