Horngren Chapter 1 Cost Accounting Exam Questions And Answers

Managerial Accounting - ANS accounting used to provide information and analyses to managers inside the organization to assist them in decision making based on cost benefit analysis NOT GAAP Future oriented (budget for 2019 prepared last year) Financial Accounting - ANS has a focus on the financial information that is given to external parties: Past oriented: reports on 2018 performance prepared in the following year GAAP and certified by external, independent auditors. cost accounting - ANS measures, analyzes and reports financial and nonfinancial information related to the costs of acquiring or using resources in an organization financial or managerial accounting? - ANS help managers make decision to fulfill an organizations goals who are the primary users in management accounting? - ANS managers of the organization who are the primary users in financial accounting? - ANS external users such as investors banks regulators and suppliers Time span and type of reports-management accounting - ANS varies from hourly to 15-20 years, financial and non-financial reports on products, departments, territories, and strategies Time span and type of reports- financial accounting - ANS annual and quarterly financial reports, primarily on the company as a whole two strategies management accounting - ANS cost leadership and product differentiation Strategic Cost Management - ANS cost management that specifically focuses on strategic issues Cost Leadership - ANS a strategy that aims to provide a product or service at as low a price as possible to a broad audience Management Accounting Information - ANS who are the best customers and how can we deliver value to them? what substitutes exist and how do they differ from our own? most critical capability? got enough cash, or need more? Value Chain - ANS the sequence of business functions in which a product is made progressively more useful to customers. Research & development Design of Products and Processes Production Marketing Distribution Customer service research and development (R&D) - ANS generating and experimenting with ideas related to new products, services or processes Design of products and processes - ANS detailed planning, engineering, and testing of products and processes production - ANS procuring, transporting and storing, coordinating and assembling resources to produce a product or deliver a service Marketing - ANS promoting and selling products or services to customers or prospective customers Distribution - ANS processing orders and shipping to customers customer service - ANS providing after-sales service to customers key success factors in improving performance - ANS cost and efficiency quality time innovation sustainability cost efficiency - ANS understanding the activities that cause costs to arise and managing them allows managers to react to the continuous pressure to reduce costs quality - ANS customers expect high levels of quality Time - ANS Time-two important dimensions of time are new-product development and customer-response time Innovation - ANS constant flow of innovative products or services is the basis for the ongoing success of a company. Sustainability - ANS the development and implementation of strategies to achieve long-term financial, social and environmental goals. steps in the decision making process in planning and control - ANS 1. Identify the problem and uncertainties. 2. Obtain information. 3. Make predictions about the future. 4. Make decisions by choosing between alternatives. 5. Implement the decision, evaluate performance, and learn. first four steps of the decision making process - ANS planning fifth step in the decision making process - ANS control management accounting guidelines - ANS 1. Cost-Benefit Approach 2. Behavioral and Technical Considerations 3. Different Costs for Different Purposes Cost-benefit Approach - ANS Benefits of an action/purchase generally must exceed costs as a basic decision rule. Behavioral and Technical Considerations - ANS People are involved in decisions, not just dollars and cents Different Costs for Different Purposes - ANS Managers use alternative ways to compute costs in different decision-making situations The four standards of ethical conduct for management accountants as advanced by the Institute of Management Accountants are: - ANS Competence Confidentiality Integrity Objectivity Sarbanes-Oxley Act - ANS A law passed by Congress that requires the CEO and CFO to certify that their firm's financial statements are accurate.