hilton 1e ch 01
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Chapter 1
The ChangingRole of Managerial
Accounting
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Learning Objectives (cond)
4. Explain the major differences betweenmanagerial and financial accounting.
5. Explain where managerial accountants arelocated in an organization, in terms of formalorganization, deployment in cross-functionalteams, and physical location.
6. Describe the roles of an organization's chief financial officer (CFO) or controller, treasurer,and internal auditor.
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Learning Objectives (cond)
7. Briefly describe some of the majorcontemporary themes in managerialaccounting.
8. Understand and explain the concepts of strategic cost management and the value chain.
9. Understand the ethical responsibilities of a managerialaccountant.
10. Discuss the professional organizations, certificationprocess, and ethical standards in the field of managerial accounting.
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Managerial accounting is the process of
identifyingmeasuringanalyzinginterpretingcommunicating information
in pursuit of organizational goals.
Learning Objective 1
Define Managerial Accounting
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Learning Objective 2Managing Resources, Activities, and
People
An organization . . .
Acquires Resources
Hires People
Organized setof activities
DecisionMaking
Planning
Directing
Controlling
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Learning Objective 3How Managerial Accounting Adds Value
to the OrganizationProviding information for decision making andplanning.
Assisting managers in directing and controllingactivities.Motivating managers and other employeestowards organizations goals. Measuring/evaluating performance of subunits,activities, managers, and other employees.
Assessing the organizations competitiveposition.
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Learning Objective 4Managerial versus Financial Accounting
Accounting System(accumulates financial and
managerial accounting data in thecost accounting system)
Managerial AccountingInformation for decisionmaking, planning, and
controlling anorganizations operations.
Financial AccountingPublished financial
statements and other
financial reports.
Internal
Users
ExternalUsers
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Managerial versus Financial Accounting (cond)
Managerial Accounting Financial AccountingUsers of InformationManagers, within the organization. Interested parties, outside the organization.
RegulationNot required and unregulated, since it is intendedonly for management.
Required and must conform to generally acceptedaccounting principles. Regulated by theAccounting Standards Board of the CanadianInstitute of Chartered Accountants(CICA), and, to
a lesser degree, by Canada's provincial andterritorial.securties regulators.Source of DataThe organization's basic accounting system, plus
various other sources, such as rates of effectiveproducts manufactured, physical quantities of material and labor used in production, occupancyrates in hotels and hospitals, and average take-off delays in airlines.
Almost exclusively drawn from the organization'sbasic accounting system, which accumulatesfinancial information.
Nature of Reports andProcedures
Reports often focus on subunits within theorganization, such as departments, divisions,geographical regions, or product lines. Based ona combination of historical data, estimates, andprojections of future events.
Reports focus on the enterprise in its entirety.Based almost exclusively on historical transactiondata.
LO-4
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A staff position supportsand assists line positions.
Example: A costaccountant in themanufacturing plant.
Learning Objective 5Line and Staff Positions
A line position is directlyinvolved in achieving thebasic objectives of anorganization.
Example: A production supervisor ina manufacturing plant.
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Management Accountants
An accountant in a accounting firm wouldbe in a line position, because theorganization's mission is providingaccounting services. In contrast, anaccountant at a university would be in a
staff position.
LO-5
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Management Accountants
(cond) More and more, managerial accountantswork throughout an entire enterprise andare deployed in cross-functionalmanagement teams, working with topexecutives and personnel from a variety of
functional areas (e.g., marketing,production, engineering, and operations).
LO-5
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Learning Objective 6
ControllerThe chief managerial and financialaccountant responsibility for:
Supervising accounting personnelPreparation of information and reports,managerial and financial
Analysis of accounting information
Planning and decision making
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Treasurer
Responsible for raising capital andsafeguarding the organizations assets.
Manages investmentsEstablishes credit policiesManages insurance coverage
LO-6
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Internal Auditor
Responsible for reviewing accountingprocedures, records, and reports in both thecontrollers and the treasurers area of responsibility.
Expresses an opinion to topmanagement regarding theeffectiveness of the
organizations accounting system.
LO-6
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Learning Objective 7Major Themes in Managerial Accounting
ManagerialAccounting
Informationand Incentives
Costs andBenefits
Evolution andAdaptation
BehavioralIssues
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Evolution and Adaptation inManagerial Accounting
E-Business
Service vs.Manufacturing
FirmsEmergence ofNewIndustriesGlobalization
Focus on theCustomer
Cross-Functional Teams
Product LifeCyclesand DiversityTime-Based
CompetitionInformation andCommunication
Technology
Just-in-Time Inventory
Total Quality Management
ContinuousImprovement
Change
LO-7
Computer-IntegratedManufacturing
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ObjectivesMeasure the costof resourcesconsumed.Identify andeliminate non-
value-added costs .
Cost Management Systems
CostManagement
System
LO-7
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ObjectivesDetermine efficiencyand effectiveness of
major activities.Identify and evaluatenew activities thatcan improve
performance.
Cost Management Systems (cond)
CostManagement
System
LO-7
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ProductDesign
Researchand
Development
Learning Objective 8Strategic Cost Management and the
Value Chain
Securing raw
materials andother resources
Production
Marketing
Distribution
SalesStart
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Theory of Constraints
A sequential process of identifying andremoving constraints in a system.
Restrictions or barriers that impedeprogress toward an objective
LO-8
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Learning Objective 9
Ethical Climate of BusinessThe corporate scandals experienced over the lastfew years have shown us that unethical behaviorin business is wrong in a moral sense and can be
disastrous in the economy. There will likely bemore reforms in corporate governance and
accounting in the future.
b
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Learning Objective 10
Managerial Accounting as a Career
Professional Organizations
Society of Management Accountants of Canada(CMA)
Canadian Institute of Management
Accountants (CA)
Certified General Accountants Association of Canada (CGA)
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