Chapter 1 Vocabulary: The Manager and Management Accounting

Financial Accounting

Measures and records business transactions and provides financial statements that are based on generally accepted accounting principles

Focuses on reporting to external parties, such as investors and banks

Management Accounting

Measures, analyzes, and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization

Focuses on internal reporting

Cost Accounting

Measures, analyzes, and reports financial and nonfinancial information relating to the costs of acquiring or using resources in an organization

Provides information for both management accounting and financial accounting

Cost Management

The approaches and activities of managers to use resources to increase value to customers and to achieve organizational goals

Strategy

Specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives

Strategic Cost Management

Describes cost management that specifically focuses on strategic issues

Value Chain

The sequence of business functions by which a product is made progressively more useful to customers

Research and Development (R&D)

Generating and experimenting with ideas related to new products, services, or processes

Design of Products and Processes

The detailed planning, engineering, and testing of products and processes

Production

Acquiring, storing, coordinating, and assembling resources to produce a product or deliver a service

Marketing

Promoting and selling products or services to customers or prospective

Distribution

Processing orders and delivering products or services to customers

Customer Service

Providing after-sale support to customers

Customer Relationship Management (CRM)

A strategy that integrates people and technology in all business functions to deepen relationships with customers, partners, and distributors

Supply Chain

The flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same organization or in other organizations

Sustainability

The development and implementation of strategies to achieve long-term financial, social, and environmental goals

Total Quality Management (TQM)

An integrative philosophy of management for continuously improving the quality of products and processes

Planning

Selecting organization goals, predicting results under various alternative ways of achieving those goals, deciding how to attain the desired goals, and communicating the goals and how to achieve them to the entire organization

Budget

Quantitative expression of a proposed plan of action by management for a specified period, and an aid to coordinating what needs to be done to execute that plan

Control

Taking actions that implement the planning decisions, evaluating past performance, and providing feedback and learning that will help future decision-making

Learning

Involves managers examining past performance and systematically exploring alternative ways to make better-informed decisions and plans in the future

Cost-Benefit Approach

Approach to decision making and resource allocation based on a comparison of the expected benefits from attaining company goals and the expected costs

Line Management

Managers (for example, in production, marketing, or distribution) who are directly responsible for attaining the goals of the organization

Staff Management

Staff (such as management accountants and human resources managers) who provide advice, support, and assistance to line management

Chief Financial Officer (CFO) / Finance Director

Executive responsible for overseeing the financial operations of an organization

Controller / Chief Accounting Officer

The financial executive primarily responsible for management accounting and financial accounting