Professional Documents
Culture Documents
Accounting Disciplines
Financial Accounting focus on external
users and GAAP rules Managerial Accounting focus on internal users and is not necessarily GAAP-driven. Also provides data for financial accounting. This includes:
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Financial
Communicate Financial Position
Internal Managers Primary Users Internal Managers Focus Rules Time Span Future Oriented Cost-benefit Varies
External Stakeholders
Past Oriented GAAP Annual/Quarter
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To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
contd
Managerial
Type of Information
Financial
Financial, plus operational and Financial measurements physical measurements on only processes, technologies, suppliers, customers, and competitors
More subjective and judgmental; valid, relevant, accurate Disaggregate; inform local decisions and actions
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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matches its own capabilities with the opportunities in the marketplace to accomplish its objectives Strategic Cost Management focuses specifically on the cost dimension within the overall strategy
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Who are our most important customers? What substitute products exist? What is our critical resource? Will we have enough cash to support our strategy?
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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planning and implementing strategy Value is the usefulness a customer gains from a companys product or service Value Chain is the sequence of business functions in which customer usefulness is added to products or services
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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providing a product or service, its include: Research and Development Design Production Marketing Distribution Customer Service Management accounting can provide information in each of these areas Analysis can also include the supply chain Supply chain consists of all activities from receipt of an order to product or service delivery
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Technological changes such as enterprise resource planning (ERP) to centralize and integrate information Just-in-time inventory methods to deliver goods just in time for use, lowering inventory costs
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Total Quality Management (TQM) to reduce defects in finished products Activity Based Costing (ABC) to focus on activities that produce costs, and to then scrutinize and control those costs
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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customers expect, and that are key to the success of a company include:
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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planning decision, decides how to evaluate performance, and provides feedback to the organization
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Scorekeeper
Attention Director
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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benefits generally must exceed costs as a basic decision rule Behavioral and Technical Considerations people are involved in decisions, not just dollars and cents Different definitions of cost may be used for different applications
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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CEO
CFO
Controller responsible for managerial and financial accounting Treasury Risk Management Taxation Internal Audit
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Controller
Treasurer
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Professional Ethics
The four standards of ethical conduct for
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Competence
Practitioners of management accounting and financial management have responsibility to : Maintain an appropriate level of professional competence by ongoing development of their knowledge and skills Perform their professional duties in accordance with relevant laws, regulations, and technical standards Prepare complete and clear reports and recommendations after appropriate analysis of relevant and reliable information
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Beliefs System
the explicit set of statements, communicated to employees, of the basic values, purposes, and direction of the organization
Boundary Systems
prescribe organization behaviors that are unacceptable and usually state the consequence of unacceptable behavior
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Confidentiality
Practitioners of management accounting and financial management have a responsibility to : Refrain from disclosing confidential information acquired in the course of their work except when authorized, unless legally obligated to do so Inform subordinates as appropriate regarding the confidentiality of information acquired in the course of their work and monitor their activities to assure the maintenance of the confidentiality Refrain from using or appearing to use confidential information acquired in the course of their work for unethical or illegal advantage either personally or through third parties
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Integrity
Practitioners of management accounting and financial management have a responsibility to : Avoid actual or apparent of interest and advise all appropriate parties of any potential conflict Refrain from engaging in any activity that would prejudice their ability to carry out their duties ethically Refuse any gift, favor, or hospitality that would influence or would appear to influence their actions Refrain from actively or passively subverting the attainment of the organizations legitimate and ethical objectives Recognize and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity Communicate unfavorable as well favorable information and professional judgments or opinions Refrain from engaging in or supporting any activity that would discredit the profession
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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Objectivity
Practitioners of management accounting and financial management have a responsibility to : Communicate information fairly and objectively Disclose fully all relevant information that could reasonably be expected to influence an intended users understanding of the reports, comments, and recommendations presented
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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MANAGEMENT ACCOUNTING
To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.
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process of planning, designing, measuring, and operating both nonfinancial information systems and financial information systems that guides management action, motivates behavior, and supports and creates the cultural values necessary to achieve an organizations strategic, tactical, and operating objectives
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To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.