Introduction to Managerial Accounting Flashcards

Vocabulary practice flashcards for Chapter 1 of Managerial Accounting.

Managerial Accounting

A field of accounting that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control.

Planning

The primary management responsibility of setting goals and objectives for the company and determining how to achieve them.

Directing

The primary management responsibility of overseeing the company's day-to-day operations.

Controlling

The primary management responsibility of evaluating the results of business operations against plans and making adjustments as needed.

Primary Users of Managerial Accounting

Internal company stakeholders, such as managers.

Primary Users of Financial Accounting

External stakeholders, such as creditors, stockholders, and government regulators.

Primary Accounting Product of Financial Accounting

Financial statements designed to help external users make investing and lending decisions.

Cost-Benefit Constraint in Managerial Accounting

The standard that reports are prepared only when management believes the benefit of using the report exceeds the cost of preparing it.

Basis of Managerial Accounting Information

Information that focuses on the future and provides details on both external and internal transactions, though some is based on past transactions.

Basis of Financial Accounting Information

Information based strictly on historical transactions with external parties.

Emphasis of Managerial Accounting Information

The relevance of information to support managerial decisions rather than historical reliability.

Business Unit Focus in Managerial Accounting

Segments of the business, such as products, customers, geographical regions, departments, and divisions.

Business Unit Focus in Financial Accounting

The company as a whole via consolidated financial statements, with limited segment data in footnotes.

Audit Requirements for Financial Accounting

Independent certified public accountants (CPAs) audit annual financial statements of publicly traded companies to express an opinion on their fairness.

Audit Requirements for Managerial Accounting

There are no independent audits, though the company's internal audit function may examine report-preparation procedures.

Behavioral Implications in Managerial Accounting

Concerns regarding how accounting systems and reports will affect employee behavior, which management carefully considers during system design.

Technical Competencies of Management Accountants

Core accounting skills including planning, budgeting, forecasting, internal financial reporting, cost management, internal controls, and data analytics.

Nontechnical Competencies of Management Accountants

Essential professional soft skills including ethics, communication, customer service, adaptability, strategic thinking, leadership, and collaboration.

Organizational Structure of Management

The reporting structure where the Board of Directors oversees the CEO, who manages the COO and CFO, while Internal Audit reports directly to the Audit Committee.

Chief Executive Officer (CEO)

The executive responsible for the overall management of a company, reporting directly to the Board of Directors.

Chief Financial Officer (CFO)

The senior executive reporting to the CEO who is responsible for all financial concerns of the company, overseeing the Treasurer and Controller.

Treasurer

An executive reporting to the CFO who is responsible for raising capital and investing company funds.

Controller

An executive reporting to the CFO who acts as the chief accounting officer managing financial and managerial accounting activities.

Audit Committee

A subcommittee of the Board of Directors that oversees internal audit and independent CPA audits, requiring financial expertise and independence from company operations.

Institute of Management Accountants (I M A)

The professional association for management accountants in the United States that grants the Certified Management Accountant certification and sets ethical standards.

Certified Management Accountant (C M A)

A professional designation requiring a two-part exam, a baccalaureate degree, two years of work experience, and continuing education.

Ethical Standards of the IMA

The four core standards that management accountants must uphold: Competence, Confidentiality, Integrity, and Credibility.

Resolution of Ethical Dilemmas

The protocol of following established company policies first, then discussing with a supervisor, consulting an objective advisor or IMA hotline, and consulting an attorney if necessary.

Enterprise Resource Planning (E R P) Systems

Software applications like SAP and Oracle that integrate all of a large company's worldwide functions, departments, and data.

Knowledge Economy

An economic system where more people work in the service sector than in manufacturing, retail merchandising, construction, mining, and agriculture combined.

Sustainability

The ability to meet present needs without compromising the ability of future generations to meet their own needs.

Triple Bottom Line

A performance metric that evaluates a company's success across three pillars: social, environmental, and economic factors (people, planet, and profit).

Sarbanes-Oxley Act of 2002 (S O X)

Federal legislation enacted to restore trust in corporate financial reporting and governance in response to scandals such as Enron and WorldCom.

SOX Executive Responsibility Provision

A rule requiring the CEO and CFO to assume direct responsibility for the company's financial statements, internal control system, and financial reporting procedures.

SOX Audit Committee Requirements

A rule mandating that the Audit Committee must be independent of corporate executives and include a financial expert.

SOX CPA Firm Regulations

Rules placing limits on non-audit services CPA firms can perform for audit clients and requiring periodic quality reviews.

Data Analytics

The process of examining raw data to extract actionable insights for making informed business decisions.

Data Analytics Process Steps

The sequence of identifying the business issue, identifying required data, selecting tools, analyzing data to derive insights, communicating results, and following through on implementations.

Active Cell in Excel

The currently selected cell in an Excel worksheet, outlined with a dark border, whose address appears in the Name Box and content appears in the Formula Bar.

Relative Reference in Excel

A cell reference (such as $=A3$) that contains no dollar signs and automatically adjusts its cell target relative to its new position when copied.

Absolute Reference in Excel

A cell reference using dollar signs (such as $=\$A\$3$) to hold row and column coordinates fixed when copied across a worksheet.

Fill Handle

The small square located in the bottom-right corner of an active cell in Excel, used to drag and copy formulas or patterns into adjacent cells.

Function Library

A grouped collection of built-in functions located under the Formulas tab on the Excel ribbon.