Managerial Accounting – Vocabulary Flashcards (Unit 1.1 & Ethics - 1.3)

Vocabulary flashcards covering key terms, concepts, and ethics from the Managerial Accounting notes (Unit 1.1 and 1.3).

Managerial accounting

Creates and analyzes relevant information to help managers plan, decide, and control operations inside the organization. Internal use; future oriented; timely; decision useful.

Financial accounting

External reporting for investors, lenders, and regulators; focuses on past performance; GAAP-based; periodic and aggregated.

Primary users

Managers at all levels, department heads, project leaders, and operations who rely on managerial accounting information.

External users

Investors, lenders, regulators who rely on financial accounting reports.

Planning

Setting goals, budgets, and forecasts.

Directing/Leading

Running daily operations, schedules, and performance dashboards.

Controlling

Comparing actual results to plan, analyzing variances, and taking corrective actions.

Decision making

Choosing among alternatives using relevant cost information, CVP, make-or-buy, and pricing.

Budgets

Quantified plans for a future period used to coordinate and control operations.

Standard costs

Predetermined costs used for planning, budgeting, and variance analysis.

Variance analyses

Deviations between actual and standard/budgeted costs to identify performance gaps.

Product profitability

Profitability analysis by product to assess product performance.

Customer profitability

Profitability by customer to understand customer-specific contributions.

Channel profitability

Profitability by distribution channel.

Cost behavior

How costs change in response to changes in activity level.

CVP (Cost-Volume-Profit)

Analysis of how costs, volume, and profits interact.

Break-even

Sales level at which total revenues equal total costs; zero profit.

Performance measures

Metrics used to evaluate efficiency, effectiveness, and progress toward goals.

Scorecards

System of performance measures tracking progress; often includes financial and nonfinancial metrics.

Nonfinancial metrics

Metrics not expressed in dollars (e.g., quality, timeliness) linked to strategy.

Relevance over precision

Emphasizing timely, decision-useful information over exact numeric precision.

Balanced scorecards

Integrated measures across financial, customer, internal process, and learning perspectives to guide strategy.

Strategy execution

Implementation of strategy through aligned actions and monitoring.

IMA Statement of Ethical Professional Practice

Ethical framework with four standards guiding management accountants.

Competence

Maintain and apply knowledge; comply with laws and standards; provide accurate information.

Confidentiality

Protect confidential information and disclose only when authorized or required.

Integrity

Avoid conflicts of interest and misrepresentation; uphold professional standards.

Credibility

Communicate information fairly and objectively; disclose constraints; correct errors.

Resolution process

Follow policies, consult supervisor/audit committee, use ethics hotline, disassociate if unresolved.

Dilemmas in managerial accounting ethics

Common issues: pressure to manipulate budgets, misstate costs, ignore control weaknesses, or handle data privacy improperly.

Role framing

Management accountants as stewards of reporting and control, partners in operations, and ethics models.

Key takeaway

Accurate, unbiased information plus adherence to IMA standards protects decisions, stakeholders, and your career.