Ma Chapter 01

8/8/2019 Ma Chapter 01

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The Accountants Role in the Organization


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Accounting Discipline Overviewy Managerial Accounting measures, analyzes and

reports financial and nonfinancial information to help

managers make decisions to fulfill organizationalgoals. Managerial accounting need not be GAAPcompliant.

y

Financial Accounting focus on reporting to externalusers including investors, creditors, and governmentalagencies. Financial statements must be based onGAAP.


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Major Differences Between

Financial & Managerial AccountingManagerial Accounting Financial Accounting

PurposeD

ecision making

Communicate financial

position to outsiders

Primary Users Internal managers External users

Focus/Emphasis Future-oriented Past-oriented

RulesD

o not have to follow GAAP;cost vs. benefit GAAP compliant;CPA audited

Time SpanUltra current to very long

time horizonsHistorical monthly,

quarterly reports


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Strategy & Management Accounting

yStrategy specifies how an organization matches itsown capabilities with the opportunities in themarketplace to accomplish its objectives

y Strategic CostManagement focuses specifically on

the cost dimension within a firms overall strategy


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Strategy & Management Accountingy Management accounting helps answer important

questions such as:y Who are our most important customers, and how do we

deliver value to them?

y What substitute products exist in the marketplace, and

how do they differ from our own?y What is our critical capability?

y Will we have enough cash to support our strategy or willwe need to seek additional sources?


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Management Accounting and Valuey Creating value is an important part of planning and

implementing strategy

yValue is the usefulness a customer gains from acompanys product or service


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Management Accounting and ValueyValue Chain is the sequence of business functions

in which customer usefulness is added to productsor services

y The Value-Chain consists of:1. Research & Development

2. Design

3. Production

4. Marketing5. Distribution

6. Customer Service


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The Value Chain Illustrated


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Key Success Factorsy The dimensions of performance that customers

expect, and that are key to the success of a company

include:y Cost and efficiency

y Quality

y Time

y

Innovation


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Planning & Control Systemsy Planning selects goals, predicts results, decides how to

attain goals, and communicates this to the

organizationy Budget the most important planning tool

y Control takes actions that implement the planningdecision, decides how to evaluate performance, and

provides feedback to the organization


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A Five-Step Decision Making Process inPlanning & Control

1. Identify the problem and uncertainties2. Obtain information

3. Make predictions about the future

4. Make decisions by choosing between alternatives

5. Implement the decision, evaluate performance, andlearn


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A Typical Organizational Structure andthe Management Accountant

yA typical structure might include:

y CEOy CFO

y Controller responsible for managerial and financialaccounting

y

Treasuryy RiskManagement

y Taxation

y Internal Audit


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Professional Ethicsy The four standards of ethical conduct for management

accountants as advanced by the Institute ofM

anagement Accountants:y Competence

y Confidentiality

y Integrity

y

Objectivity

Documents

Ma Chapter 01