Chapter 1: Introduction to Managerial Accounting

Vocabulary flashcards covering key terms and concepts from Chapter 1: Introduction to Managerial Accounting, including definitions, roles, ethics, and Canadian accounting designations.

Managerial accounting

Providing accounting information for a company’s internal users; not bound by GAAP or IFRS; supports planning, controlling, and decision making.

Internal users

People inside the organization who rely on managerial accounting information.

GAAP

Generally Accepted Accounting Principles; external reporting standards not binding on managerial accounting.

IFRS

International Financial Reporting Standards; external reporting standards not binding on managerial accounting.

Planning

The management activity of formulating actions to achieve objectives; involves setting objectives and identifying methods (e.g., supplier evaluation program).

Controlling

Monitoring a plan’s implementation and taking corrective action; comparing actual performance to expected performance.

Decision making

The process of choosing among competing alternatives.

External users

Users outside the organization who rely on financial accounting information.

Time orientation (financial vs managerial)

Financial accounting focuses on historical events; managerial accounting focuses on future events.

Breadth of information

Financial accounting is self-contained; managerial accounting integrates multiple disciplines (e.g., managerial economics, industrial engineering, management science).

Accounting system flexibility

A system should be flexible enough to provide different information for different purposes.

Efficiency

Cost is a key measure; efficiency requires defining, measuring, and assigning cost; improving efficiency is a vital concern.

Service and not-for-profit applicability

Management accounting concepts now apply to service and not-for-profit organizations as well as manufacturing.

Role of the management accountant

A support role that assists those responsible for achieving the organization’s objectives.

Line positions

Positions with direct responsibility for the organization’s basic objectives.

Staff positions

Positions that are supportive and have indirect responsibility for the organization’s objectives.

Controller

Internal function handling internal auditing, cost accounting, financial accounting, and systems accounting.

Treasurer

Raises capital and manages cash/investments; responsible for credit, collection, and insurance.

Ethical behaviour

Profits should be achieved through legal and ethical means; actions should be right, proper, and just.

Core values

Ten foundational values: honesty, integrity, promise keeping, fidelity, fairness, caring for others, respect for others, responsible citizenship, pursuit of excellence, accountability.

Company codes of ethical conduct

Organizational standards emphasizing integrity, duties, and compliance with law; prohibit kickbacks, improper gifts, insider trading, and misappropriation.

Standards of ethical conduct for managerial accountants

Ethical standards from CPA Canada and IMA emphasizing competence, confidentiality, integrity, and credibility/objectivity.

Accounting designations in Canada

Certifications (CMA, CA, CGA) historically; now merged into the Chartered Professional Accountant (CPA) designation.

CPA Canada

The body formed in 2013 to unify the three former Canadian accounting groups; new members receive the CPA designation.

Amalgamation transition period

For about ten years after merger, members could use both CPA and their former designation.