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MA Cabrera 2010 - SolMan

MA Cabrera 2010 - SolMan

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Published by: Carla Francisco Domingo on Nov 13, 2012
Copyright:Attribution Non-commercial


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Use of the word “need” in the quoted passage is pejorative. It implies an unlimited level of 
demand for information. However, rational managers apply a cost-benefit criterion toinformation and will only want accounting information if its benefits exceed its costs.Accounting information provides benefits by improving decision making and controllingbehavior in organizations. In most organizations, accounting information is very prevalent whichimplies that its benefits exceed its costs. Hence, successful managers will find it in their self-interest to learn how to use accounting information in these organizations.Clearly, this statement is incurred in those firms where accounting information has very limitedusefulness (e.g., if the accounting information is often wrong or is not produced in a timelyfashion). In these organizations, managers do not find the accounting information to havebenefits in excess of its costs, will not use it, do not need to know how to use it, and definitely donot need it.2. a. Historical costs are of limited use in making planning decisions in a rapidly changingenvironment. With changing products, processes and prices, the historical costs areinadequate approximations of the opportunity costs of using resources.Historical costs may, however, be useful for control purposes, as they provide informationabout the activities of managers and can be used as performance measures to evaluatemanagers.b. The purpose of accounting systems is to provide information for planning purposes andcontrol. Although historical costs are not generally appropriate for planning purposes,additional measures are costly to make. An accounting system should include additionalmeasures if the benefits of improved decision making are greater than the costs of theadditional information.3. Finance and economics textbooks traditionally state that the goal of a profit organization is tomaximize shareholder wealth. Managers are frequently presumed to act in the best interest of theshareholder, although recent finance literature recognizes that appropriate incentives arenecessary to align manager interests with shareholder interests. The goal, however, are not veryclear as to how this is achieved. Most finance textbooks focus on financing decisions and not onthe use of assets and dealing with customers.
Marketing’s goal of satisfying customers recognizes that customers are the source of revenues for 
the organization, and therefore the means through which shareholder value is increased.However, customer satisfaction is only valuable insofar as it creates shareholder wealth. Thefurther goal of marketing is to ensure that customer satisfaction is maximized withoutcompromis
ing the organization’s profitability.
 4. Yes. Planning is really much more vital than control; that is, superior control is fruitless if faultyplans are being implemented. However, planning and control are so intertwined that it seemsartificial to draw rigid lines of separation between them.
5. Yes. The controller has line authority over the personnel in his own department but is a staff executive with respect to the other departments.6. Line authority is exerted downward over subordinates. Staff authority is the authority to advisebut not command others; it is exercised laterally or upward. Functional authority is the right tocommand action laterally and downward with regard to a specific function or specialty.7. Cost accounting is the con
troller’s primary means of implementing the 7
-point concept of moderncontrollership. Cost accounting is intertwined with all seven duties to some extent, but its majorfocus is on the first three.8.
 Bettina Company
PresidentVP, Production VP, Finance VP, SalesController TreasurerAssistantControllerAssistantTreasurerSpecialStudiesManagerCostAccountingManagerTaxManagerInternalAuditManagerGeneralAccountingManagerSystem &EDPManagerCostSystemsAnalystBudget &StandardCost AnalystPerformanceAnalystCostClerk PayrollClerk AccountsReceivableClerk AccountsPayableClerk BillingClerk GeneralLedgerBookkeeper
9. Management accountants contribute to strategic decisions by providing information about the
sources of competitive advantage and by helping managers identify and build a company’s
resources and capabilities.10. In most organizations, management accountants perform multiple roles: problem solving(comparative analyses for decision making), scorekeeping (accumulating data and reportingreliable results), and attention directing (helping managers properly focus their attention).
11. Three guidelines that help management accountants increase their value to managers are (a)employ a cost-benefit approach, (b) recognize behavioral as well as technical considerations, and(c) identify different costs for different purposes.12.
Management accounting is an integral part of the controller’s function in an organization. In
most organizations, the controller reports to the chief financial officer, who is a key member of the top management team.13. Management accountants have ethical responsibilities that are related to competence,confidentiality, integrity, and objectivity.14. By reporting and interpreting relevant data, the controller exerts a force or influence that impelsmanagement toward making better-informed decisions.
The controller of one company described the job as “a business advisor to…help the team
develop strategy and focus
the team all the way through recommendations and implementation.”
Financial Accounting
Audience: External: shareholders, creditors, taxauthoritiesPurpose: Report on past performance to externalparties; basis of contracts with owners andlendersTimeliness: Delayed; historicalRestrictions: Regulated; rules driven by generally acceptedaccounting principles and governmentauthoritiesType of Information: Financial measurements onlyNature of Information: Objective, auditable, reliable, consistent,preciseScope: Highly aggregate; report on entireorganization
 Managerial Accounting
Audience: Internal: Workers, managers, executivesPurpose: Inform internal decisions made by employeesand managers; feedback and control onoperating performanceTimeliness: Current, future orientedRestrictions: No regulations; systems and informationdetermined by management to meet strategicand operational needsType of Information: Financial, plus operational and physicalmeasurements on processes, technologies,

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