- 1. Chapter 1 Introduction to Management Accounting Managerial
Accounting, the Business Organization, and Professional Ethics
2. Users of Accounting Information Internal managers
Creditors:SuppliersBankers Day-to-day operating decisions
Long-range strategic decisions Management Accounting Financial
Accounting External Users Investors:Stockholders Government
Authorities Learning Objective 1 3. Decision Making
Scorekeeping:Evaluate Organizational Performance Attention
Directing:Compare Actual Results to Expected Problem Solving:Assess
Possible Courses of Action 4. Accounting Information System Process
of gathering, organizing, andCommunicating financial information
Financial Statements 5. Influences on Accounting Systems Generally
accepted accounting principles (GAAP) Foreign Corrupt Practices Act
Internal controls Management audits Sarbanes-Oxley Act Internal
auditors 6. Sarbanes-Oxley ActIn 2002, the Sarbanes-Oxley Act
required chief executive officers to sign a statement verifying the
accuracy of the companys financial statements. External auditors
must examine and reporton the companys internal control
system.Learning Objective 2 7. Ethics No regulation can be as
effective in ensuring reliability as high ethical standards of
accountants. Integrity Trust Reliability 8. Service and Nonprofit
Organizations Service organizations Nonprofit organizations
Accounting firms Law firms Real estate firms Banks Hotels Hospitals
Schools Libraries Museums Government agencies 9. Cost-Benefit and
Behavioral Considerations Cost-benefitbalance
Behavioralimplications Weigh estimated costs againstprobable
benefits. The system must provideaccurate, timely budgets
andperformance reports in a form useful to managers. Managers must
use accountingreports, or the reportscreate no benefits. Learning
Objective 3 10. Decision Making Decision making:the purposeful
choicefrom among a set of alternative coursesof action designed to
achieve some objective. Planning:Setting objectives and outlining
how the objectives will be obtained. Control:Implementing plans and
using feedback to evaluate the attainment of objectives. 11. The
Nature of Planning and Controlling Planning Increase
ProfitabilityControl Actions Evaluations Corrections and revisions
of plans and actions Budgets, Special Reports Accounting System
Performance Reports Customer surveys Competitor analysis
Advertising impact New items report Internal Accounting System
Management Process Other information systems Learning Objective 4
12. Budget and Performance Reports Budget: quantitative expression
of a plan of action
- compare actual results with budgeted amounts
- provide feedback by comparing results with plans
Variances: deviations from plans 13. Performance ReportsBudget
Actual Variance Sales $50,000 $50,000 0 Less: Ingredients 22,000
24,500$2,500 U Store labor 12,000 11,600 400 FOther labor 6,000
6,050 50 U Utilities, etc. 4,500 4,500 0Total expenses $44,500
$46,650$2,150 U Operating income $5,500 $3,350$2,150 U U=
Unfavorable actual exceeds budget F Favorable actual is less than
budget. Mayfair Starbucks Store, March 31, 20X7 14. Product Life
Cycle Product life cycle refers to the various stages through which
a product passes. No Sales ProductDevelopment Sales Growth
Introduction to Market Stable Sales Level Mature Market Low salesNo
sales Phase-outProduct 15. The Value Chain CustomerFocus
ResearchandDevelopment Product And Service Process Design
Production Marketing Distribution Service 16. ManagementAccountants
Role asInternal Consultant Prepares standardizedreports Collects
and compilesinformation Interprets andAnalyzes information Is
InvolvedIn decision making InternalConsultant Management Learning
Objective 5 17. Organizational Authority and Responsibility Line
managers:directly involved withmaking and sellingproducts or
services. Staff managers:Advisory Support line
managers.Cross-functional teams: Found inmodern, flatter
organizations;Functional areas work togetherIn decision making
process. 18. Accounting Function
- Reporting and interpreting
- Evaluating and consulting
Treasurer Functions
- Risk management (insurance)
Controller Functions Chief Financial Officer (CFO) Learning
Objective 6 19. Career Opportunities in Management Accounting The
Certified Management Accountant (CMA)
- CMAs must pass a four-part examination:
- Management accounting and reporting
- Strategic Management, and
- 4. Business Applications.
Learning Objective 7 20. Management Accounting Change Drivers
Shift from a manufacturing-based to a service-based economy
Increased global competition Advances in technology Changes in
business processes Learning Objective 8 21. Major Influences on
Management Accounting Business process reengineering: Just-in-time
(JIT) philosophy Lean manufacturing Computer-integrated
manufacturing Six sigma Advances in technology:
E-commerceEnterprise resource planning (ERP) 22. Standards of
Ethical Conduct The Institute of Management Accountants (IMA)
Statement of Ethical Professional Practice forManagement Accounting
Members Requires members to adhereto a code of conduct regarding:
Competence, Confidentiality, Integrity, andCredibility. Learning
Objective 9 23. Ethical Dilemmas
- Managers must choose an alternative and there are:
- Significant value conflicts among differing interests.
- Real alternatives that are all justifiable, and
- Significant consequences on stakeholders in the situation.
24. Unethical Behavior Temptations
- Avoid creative interpretations of the rules.
- Practice full and fair disclosure to convey companys
performance.
- Emphasis on short-term results:
- Pressure to meet expected profit numbers.
- Ignoring the small stuff:
- Large misdeeds often result from many small ones.
- A downturn market can reveal what an upturn market
conceals.
- Vigilance in all stages of economic markets maintains high
ethical standards.
25. The End End of Chapter 1
