costacc ppt 1

Chapter 1: Introduction to Cost and Management Accounting in a Global Business Environment

Overview

• This chapter discusses the foundational elements of cost and management accounting within a global context.

• Authors: Barfield, Raiborn, Kinney.

Learning Objectives (1 of 3)

• Financial and Management Accounting:

  • Explain the relationship between financial accounting (focus on external reporting) and management accounting (focus on internal reporting).

• Relationship Among Accounting Types:

  • Describe how cost, financial, and management accounting interrelate.

• Ethical Guidance:

  • Discuss the role of ethics in influencing behavior within the workforce.

• Globalization Factors:

  • Identify factors that impact the globalization of business operations.

Learning Objectives (2 of 3)

• Factors Impacting Strategy:

  • List primary factors and constraints influencing an organization’s strategy development.

• Competitive Environment:

  • Explain how competition shapes organizational strategies.

• Accounting’s Impact:

  • Clarify how the accounting function supports the achievement of strategic goals.

Learning Objectives (3 of 3)

• Product Life Cycle Impact:

  • Explain how the product life cycle affects the mission of company segments.

• Value Chain Importance:

  • Describe value chain significance in business operations.

Accounting: The Language of Business

Accounting Purpose

• Information Provision:

  • Provides important data to both external parties (investors, creditors, regulators) and internal decision-makers to aid in planning, controlling, and performance evaluation.

Types of Accounting

Financial Accounting

• Purpose:

  • Meets external information needs and complies with Generally Accepted Accounting Principles (GAAP).

Management Accounting

• Purpose:

  • Addresses internal needs and provides essential product costing information for external financial reporting.

Differences in Accounting

Relationship of Accounting Types

• Three Types:

  • Illustrates the interconnectedness of financial, management, and cost accounting.

Accounting Standards

Financial Accounting

• Governed by the Financial Accounting Standards Board (FASB).

Management Accounting

• Governed by the Cost Accounting Standards Board (CASB).

Relevant Accounting Organizations

• Institute of Management Accountants (IMA):

  • Develops Statements on Management Accounting (not legally binding).

  • Certification programs like Certified Management Accountant (CMA) and Certified in Financial Management (CFM).

• Society of Management Accountants of Canada:

  • Manages Management Accounting Guidelines (non-binding).

Ethics & Management Accountants

Standards of Ethical Conduct:

• Competence:

  • Maintain professional knowledge and skill.

• Confidentiality:

  • Safeguard client information.

• Integrity:

  • Avoid conflicts of interest.

• Objectivity:

  • Remain impartial and free from bias.

Global Business Environment

Components

• Trade Dynamics:

  • International trade of goods and services.

  • Movement of labor and capital.

• E-commerce and Trade Agreements:

  • NAFTA and GATT's roles in facilitating international business.

Global Business Challenges

• Understanding factors influencing global markets.

• Long-term strategic planning to align with organizational goals.

• Development of information systems to support operational consistency.

Ethical Considerations in Global Business

• Core Questions:

  • Is it legal?

  • Does it align with corporate values?

  • How would it appear in the media?

  • Would I feel guilty about it?

  • If unsure, seek advice.

Organizational Strategy

Key Aspects

• Mission Statement, Goals, and Objectives:

  • Important elements of strategic and tactical planning.

• Organizational Structure:

  • Centralization vs. decentralization influence operations.

• Core Competencies:

  • Differentiating skills including innovation, development, and service delivery.

• Constraints and Culture:

  • Explore organizational and environmental constraints impacting strategic decisions.

Business Intelligence System

Functionality

• Gathers information on internal processes and reveals market knowledge.

• Supports strategic decision-making.

Product Life Cycle and Accounting Information

• Relates mission of business segments to various life cycle stages: build, hold, and harvest.

The Accountant’s Role

• Provides essential data for:

  • Strategic decisions.

  • Performance measures.

  • Incentive structures.

  • Value chain insights.

Review Questions

• What are the interrelationships of cost, financial, and management accounting?

• How do ethical standards shape workforce behavior?

• In what ways does accounting function drive the attainment of strategic objectives?