Acc 203 Chapter 1

Managerial Accounting

Accounting that provides financial and nonfinancial information to internal managers for planning, directing, controlling, and decision-making.

Financial Accounting

Accounting that provides financial information and reports primarily to external users such as investors, creditors, regulators, and shareholders.

Planning

Setting organizational goals and objectives and deciding how to achieve them.

Directing

Overseeing day-to-day operations and putting the organization's plans into action.

Controlling

Evaluating actual business results, comparing them with plans or goals, and making adjustments when necessary.

Who primarily uses financial accounting?

External stakeholders such as investors, creditors, shareholders, and regulators.

Who primarily uses managerial accounting?

Internal managers and other internal decision-makers.

Which type of accounting must follow GAAP or IFRS?

Financial accounting.

Which type of accounting primarily reports historical information?

Financial accounting.

Which type of accounting often provides future-oriented information?

Managerial accounting.

Which type of accounting is primarily used for internal decision-making?

Managerial accounting.

Which type of accounting is mandatory for publicly traded companies?

Financial accounting.

Financial accounting emphasizes what?

Accuracy and compliance.

Managerial accounting emphasizes what?

Relevance and timeliness.

How often are financial accounting reports generally prepared?

Periodically, such as quarterly or annually.

How often are managerial accounting reports prepared?

As needed by management.

Preparing a balance sheet for external investors is what type of accounting?

Financial accounting.

Analyzing production costs for a new product line is what type of accounting?

Managerial accounting.

Creating an income statement for shareholders is what type of accounting?

Financial accounting.

Budgeting for next year's marketing expenses is what type of accounting?

Managerial accounting.

Reporting annual revenue to regulators is what type of accounting?

Financial accounting.

Assessing the profitability of a specific department is what type of accounting?

Managerial accounting.

Filing financial statements with the SEC is what type of accounting?

Financial accounting.

Monitoring the performance of a sales team is what type of accounting?

Managerial accounting.

Preparing reports according to GAAP or IFRS is what type of accounting?

Financial accounting.

IMA

Institute of Management Accountants; a professional organization for management accountants that establishes ethical standards and supports the profession.

What are the four IMA ethical standards?

Competence, Confidentiality, Integrity, and Credibility.

Competence

Maintaining appropriate professional knowledge and skills and performing duties according to relevant standards.

Confidentiality

Keeping confidential information private unless disclosure is authorized or legally required.

Integrity

Acting honestly and ethically and avoiding conduct that conflicts with ethical professional responsibilities.

Credibility

Communicating information fairly and objectively and disclosing relevant information that could influence a user's understanding.

Failing to review software specifications before recommending a purchase violates which IMA standard?

Competence.

Sharing confidential future earnings information with your sister violates which IMA standard?

Confidentiality.

Taking company office supplies for personal use violates which IMA standard?

Integrity.

Intentionally withholding relevant requested information from management violates which IMA standard?

Credibility.

Skipping a company-paid professional seminar to go sightseeing while being paid violates which standards?

Integrity and Competence.