15
The Chapter Changing
Business Environment:
A Managers Perspective
The Role of
Management Accounting
Objective 1
Distinguish management accounting from
financial accounting and explain how
management accounting supports the
management process.
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The Role of
Management Accounting
Management accounting should provide
an information system that enables
persons throughout an organization to:
Make informed decisions
Be more effective at their jobs
Improve the organizations performance
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The Role of
Management Accounting (contd)
Managers need accurate and timely
information to:
Plan and control an organizations
operations
Measure its performance
Make decisions about products or
services
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Which Organizations Need
Management Accounting?
All types and sizes of organizations:
Manufacturing
Retail
Service
Governmental
The precise type of information needed depends on an
organizations goals and the nature of its operations
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Management Accounting
The process of identification, measurement,
accumulation, analysis, preparation,
interpretation, and communication of financial
information used by management to plan,
evaluate, and control within the organization and
to assure appropriate use of and accountability for
its resources*
*As defined by the Institute of Management Accountants
(IMA) in 1982
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Management Accounting and
Financial Accounting: A Comparison
Management Accounting
Financial Accounting
Assist decision makers by identifying, measuring, and
processing relevant information (communicate this
information through reports)
Provide managers with key measures of a companys
performance
Provide managers with cost information for valuing
inventories on the balance sheet
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Table 1. Comparison of
Management and Financial Accounting
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Primary Users
Management Accounting
Managers and
employees
People inside the
organization
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Financial Accounting
Owners or
stockholders
Lenders
Customers
Governmental
agencies
Parties outside the
firm
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Financial Accounting
Takes the actual results of management
decisions about operating, investing, and
financing activities and prepares financial
statements for parties outside the
organization
Managers also rely on financial
statements for evaluating an
organizations performance
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Report Format and
Purpose of Reports
Management Accounting
Financial Accounting
Format is flexible depending Must follow standards
on users needs
and procedures
specified by generally
Provide information for
accepted accounting
planning, control,
principles (GAAP)
performance measurement,
Focus on past
and decision making
performance
Information may be either
historical or future-oriented
No formal guidelines or
restrictions
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Nature of Information
for Management Accounting
May be objective and verifiable
Expressed in monetary terms or in physical
measures of time or objects
If needed for planning purposes, may be
subjective
Based on estimates
Prepared as often as needed
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Nature of Information
for Financial Accounting
Must be based on objective and verifiable
information
Generally historical
Measured in monetary terms
Prepared and distributed periodically
Usually quarterly and annually
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Managers and
Management Process
Managers are expected to:
Use resources wisely
Operate profitably
Pay debts
Abide by laws and regulations
To fulfill these expectations, managers
Establish the goals, objectives, and strategic plans of
the organization
Guide and control operating, investing, and financing
activities accordingly
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Management Process
1.
2.
3.
4.
Planning
Performing
Evaluating
Communicating
Management accounting supports each stage
of the process
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Planning
The overriding goal or vision of a business
is to increase the value of the stakeholders
interest in the business
Mission
A statement of the fundamental way in which a company
will achieve its goal of increasing the stakeholders value
Strategic Objectives
Tactical Objectives
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Operating Objectives
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Planning: Strategic Objectives
Broad, long-term goals
Determine the fundamental nature and
direction of the business
Serve as a guide for decision making
Established by top management
Involve what the companys main products
or services will be, who its customers will
be, where it will operate, etc.
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Planning: Tactical Objectives
Mid-term goals
Position the firm to meet its long-term
strategies
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Planning: Operating Objectives
Short-term goals
Outline expectations for performance of
day-to-day operations
Link to performance targets and specify
how success will be measured
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Business Plan
The development
of strategic and
operating
objectives
requires
managers to
formulate a
business plan
A comprehensive statement
of how the company will
achieve its objectives
Usually expressed in
financial terms in the form
of budgets
Often includes performance
goals for individuals,
teams, products, or services
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Role of Management Accounting
and Planning at Good Foods Store
Anna Wang is about to open her own retail
grocery store called Good Foods Store.
Goals
Obtain an income from the business
To increase the value of her investment
Mission
To attract customers and retain them by selling
high-quality foods in a boutique atmosphere
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Role of Management Accounting and
Planning at Good Foods Store (contd)
Strategic objectives
Purchase of high-quality fresh foods and the resale of
these items to consumers
Tactical objectives
Implementation of a stable supply chain of high quality
suppliers and a customer database to track customer
preferences
Operating objectives
Courtesy and efficiency in serving customers
Track number and type of customer complaints
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Role of Management Accounting and
Planning at Good Foods Store (contd)
To apply for a start-up loan, Wang must have a business
plan:
A full description of the business
Complete operating budget for the first two years of
operations
The budget must include
Forecasted income statement
Forecasted statement of cash flows
Forecasted balance sheet
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Role of Management Accounting and
Planning at Good Foods Store (contd)
To provide relevant information for the plan, Wang will
have to determine:
The types of products to sell
Anticipated sales volume
Selling price for each product
Monthly costs of
Leasing or purchasing facilities
Maintaining the facilities
Employing personnel
Number of display counters, storage units, and cash
registers needed
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Performing
Planning alone does not guarantee
satisfactory operating results
Management must implement the business
plan in ways that make optimal use of
available resources
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Performing (contd)
Smooth operations require one or more of the
following
Hiring and training personnel
Matching human and technical resources to the
work that must be done
Purchasing or leasing facilities
Maintaining an inventory of products for sale
Identifying operating activities, or tasks, that
minimize waste and improve the quality of the
products or services
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Performing (contd)
Performance is carried out by overseeing the daily
operations of the organization
Small Organizations
Managers supervise
and interact with
employees to help
them learn a task or
improve
performance
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Large Organizations
May monitor
performance by
measuring activity
times or frequency of
completion of
activities performance
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The Role of Management Accounting
and Performance in Good Foods Store
Anna Wang has obtained a bank loan and Good
Foods Store is now open for business.
The budget prepared for the stores first two years
of operation provides the link between the business
plan and the performance plan
Items that relate to the business plan appear in the budget and
become authorizations for expenditures
Examples:
Spending on store fixtures
Hiring employees
Developing advertising campaigns
Pricing items for special sales
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The Supply Chain
The path that leads from the suppliers of the
materials from which the product is made to
the final consumer
Also called the supply network
Is critical to managing any retail business
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The Supply Chain (contd)
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The Role of Management Accounting and
Performance in Good Foods Store (contd)
In the supply chain for grocery stores, produce and
other items flow from growers and suppliers to
manufacturers or distributors to retailers to
consumers
Wang must coordinate deliveries from local
growers and international distributors to meet the
demands of her customers without
Too much inventory tying up cash
Too little inventory leading to lost sales
Management accounting information about deliveries
and sales will help Wang manage the supply chain
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Evaluating
Managers compare actual performance with
the performance levels established in the
planning phase
Significant variations are earmarked for further
analysis to correct problems
May revise original objectives
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The Role of Management Accounting
and Evaluation for Good Foods Company
Anna Wang should monitor the following:
Financial performance
Compare the amounts estimated in the budget with
information about actual results
If differences occur, they should be analyzed
Customer service
The number and type of customer complaints
Review of these records may help develop new and better
business strategies
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Communicating
Essential that both internal and external
accounting reports
Provide accurate information
Clearly communicate this information
to the reader
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Communicating (contd)
Internal reports
Inaccurate or unclear
information can have
a negative impact on
a companys
operations and
profitability
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External reports
GAAP require full
disclosure and
transparency in financial
statements
Violations of this
principle can result in
stiff penalties
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Communicating (contd)
Congress passed legislation on financial
reporting following reporting violations by
Enron, WorldCom, and other companies
Requires top management of publicly owned
corporations to certify that statements are
accurate
Penalties for issuing false statements can
include loss of compensation, fines, and jail
time
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Communicating (contd)
The four Ws
1.
2.
3.
4.
Why?
Who?
What?
When?
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These four questions are
the key to producing
management accounting
reports that communicate
accurate and useful
information in such a way
that the meaning is
transparent to the reader
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Why?
Know the purpose of the report
Focus on it as you write or prepare reports
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Who?
Identify the audience for your report
Communicate at your audience's level of
understanding of the issue and their familiarity
with accounting information
Manager as the audience
A detailed, informal report may be
appropriate
President or board of directors as the audience
A concise summary may be more
appropriate
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What?
What information is needed?
Select relevant information from reliable
sources
What method of presentation is best?
Information should be easy to read and
understand
May include visual aids, such as bar charts or graphs
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When?
Know the due date for the report
Strive to prepare an accurate report on a
timely basis
If the report is needed urgently, some level of
accuracy may have to be sacrificed
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The Role of Management Accounting and
Communication for Good Foods Store
Anna Wang has hired Sal Chavez to be her
companys accountant and prepare the companys
financial statements.
Why?
To report on the financial health of the company
Who?
Wang, her bank and other creditors, and potential
investors are the audience for the report
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The Role of Management Accounting and
Communication for Good Foods Store (contd)
What?
The report will include disclosures about
assets, liabilities, product costs, and sales
When?
The required reporting deadline for the
accounting period
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The Role of Management Accounting and
Communication for Good Foods Store (contd)
Wang will also want periodic internal
reports on various aspects of operations
Monthly report: Summarizes the costs of
ordering products from distributors and growers
with related shipping charges
If costs appear too high, Wang may ask Sal Chavez
to conduct a special study
The results of the study might result in a
memorandum report
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A Management Accounting Report
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Management Accounting
Can provide a constant stream of relevant
information in all stages of the management
process
Developing a business plan
Communicating the business plan to other parties, such
as creditors and employees
Evaluating the performance of employees
Reporting the results of operations
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Stop & Review
Q. Must management accounting information
always be objective?
A. No, information needed for planning
purposes may be subjective because it is
based on estimates. But, management
accounting information should always be
verifiable.
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Value Chain Analysis
Objective 2
Describe the value chain and its usefulness
in analyzing a business.
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Value Chain
Includes all functions and related activities
in the development path of a product or
service that contribute to its value and
marketability
Each step in the manufacture of a product or delivery of a
service can be thought of as a link in a chain that adds value
to the product or service
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Value Chain Analysis
Primary processes
Steps that add
value to a product
or service
Support services
Include legal services and
management accounting
Range from
research and
development to
customer service
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Facilitate the primary
processes but do not add
value to the final product
or service
Their roles are critical in
making the primary
processes as efficient and
effective as possible
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Primary Processes
and Support Services
Anna Wang wants to determine if it is feasible to
produce and sell her own brand of candy
Identify the primary processes and support services that
will add value
Primary Processes
Support Processes
Research and Development Human Resources
Design
Legal Services
Supply
Information Systems
Production
Management Accounting
Marketing
Distribution
Customer Service
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Advantages of
Value Chain Analysis
Allows a company to focus on its core
competencies
What a company does best
What gives a company an advantage over its
competitors
Wal-Marts core competency is having the
lowest prices on many products.
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Advantages of
Value Chain Analysis (contd)
Outsourcing
The engagement of other companies to perform
a process or service in the value chain that is
not among a companys core competencies
Wal-Mart outsources its inventory
management to its vendors who monitor and
track Wal-Mart stores and warehouses.
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Managers and
Value Chain Analysis
Analysis of the value chain is critical to most
companys survival in todays competitive business
environment
Managers must provide the highest value to
customers at the lowest cost
Low cost equates to the speed at which the primary
processes of the value chain are executed
Referred to as time to market
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Managers and
Value Chain Analysis (contd)
Managers must also make the services that support
the primary processes as efficient as possible
Support services are essential and cannot be eliminated
Because they do not add value to a product, they must
be implemented as economically as possible
Advances in technology have helped reduce the cost of the
accounting function in many companies from 6 percent to 2
percent of total revenue
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Managers and
Value Chain Analysis (contd)
As a support service, management
accounting must be efficient and provide
value to managers
Information must be developed that is useful in
decision making
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Management Accounting and
Value Chain Analysis Illustrated
Anna Wang will need accurate information
about the cost of the candy to determine
whether manufacturing and selling her own
brand of candy will be profitable
To remain competitive, Wang knows she cannot sell
her candy for more than $10/lb.
She also has an idea of how much candy she can sell
in the first year
Sal Chavez analyzes the value chain and
projects the initial costs per pound
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Value Chain Analysis
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Management Accounting and Value
Chain Analysis Illustrated (contd)
Wang is concerned about the initial cost of $8 per
pound (this leaves only $2 per pound ($10 - $8) to
cover all support services and leave a profit)
This margin is equal to 20 percent of revenue ($2 $10)
Selling Price - Costs
Margin =
Selling Price
Wang believes the margin should be at least
35 percent for the enterprise to be
successful
Since the selling price is constrained by the
competition, costs must be reduced
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Management | Accounting and Value
Chain Analysis Illustrated (contd)
Chavez points out that the highest costs in the food stores
value chain are for supply and production
He looks for ways to reduce the cost per pound:
1. Sell a higher volume of candy
Not realistic for the new product
2. Use a single supplier (Wang had planned on ordering from a
number of suppliers)
Her orders would not be large enough to qualify for quantity
discounts
Cost savings equal $0.50 per pound
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Management Accounting and Value
Chain Analysis Illustrated (contd)
3. Outsource production
A candy manufacturer with a high volume of
products can produce the candy at a much lower
cost than could be done at Good Foods Store
Production costs from outsourcing would be
$3.50 per pound versus $4.50 per pound if
produced by Good Foods Store
Cost savings equal $1.00 per pound ($4.50 $3.50)
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Management Accounting and Value
Chain Analysis Illustrated (contd)
These cost savings would allow Wang to sell her
candy at a competitive price of $10/pound and
make the targeted margin of 35 percent
Margin =
($10.00 - $6.50)
= 0.35, or 35 percent
$10.00
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Management Accounting and Value
Chain Analysis Illustrated (contd)
Two important points illustrated by this value chain
analysis:
1. Good Foods Stores mission is as a retailer
The company has no manufacturing experience
To manufacture candy, the company would need to change its
mission and make major changes in the way it does business
1. It is often the best policy to outsource portions of the value
chain that are not part of a companys core competency
Because Good Foods Stores do not have a core competency in
candy manufacturing, it would not be competitive in this field
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Management Accounting and Value
Chain Analysis Illustrated (contd)
Wang would be better off having an
experienced candy manufacturer produce
the candy according to her specifications
She could then sell the candy under her
stores label
As business grows, increased volume may
allow Wang to reconsider undertaking
candy manufacturing
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Stop & Review
Q. Is customer service considered a primary
process or support service in value chain
analysis?
A. Customer service is a primary process
because it adds value to a product or service
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Continuous Improvement
Objective 3
Identify the management tools used for
continuous improvement.
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Continuous Improvement (contd)
The management concept that one should
never be satisfied with the way things are.
One should always seek a better method,
product, process, or resource
In response to this concept, several important
management tools have emerged
These tools help companies remain competitive
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Management Tools for
Continuous Improvement
Just-in-time (JIT) operating philosophy
Total quality management (TQM)
Activity-based management (ABM)
Theory of constraints (TOC)
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Just-in-Time (JIT)
Operating Philosophy
Requires that all resources
(materials, personnel, and facilities) be
acquired and used only as needed
Objectives:
Improve productivity
Eliminate waste
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The JIT Environment
Production processes are consolidated
Workers are trained to be multiskilled
Can operate several different machines
Materials and supplies are scheduled for
delivery just at the time they are needed in
the production process
Significantly reduces inventories of materials
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The JIT Environment (contd)
Goods are produced continuously
Work in process inventories are very small
Goods are put into production only when
an order is received and are shipped when
completed
Reduces finished goods inventory
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JIT Operating Philosophy
Adopting the JIT philosophy
Reduces production time and costs
Reduces investment in materials inventory
Reduces materials waste
Results in higher quality goods
Funds no longer invested in inventory can
be redirected according to the goals of the
business plan
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Total Quality Management (TQM)
Requires that all parts of a business work
together to build quality into the
businesss product or service
Goal: Improved quality of both the product or
service and the work environment
Workers act as team members and are empowered
to make operating decisions that improve quality in
these two areas
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TQM (contd)
Focus
Improving product or service quality by identifying and
reducing or eliminating the causes of waste
Emphasis
Examining current operations to spot possible causes of
poor quality
Using resources efficiently and effectively to
Improve quality
Reduce time needed to complete a task or provide a service
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TQM (contd)
Has many characteristics of the JIT
operating philosophy
Both result in:
Reduced waste of materials
Higher-quality goods
Lower production costs in manufacturing
environments
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TQM: Costs of Quality
Used to determine the impact of poor
quality on profits
Costs of achieving quality
Such as training costs and inspection costs
Costs of poor quality
Such as the costs of rework and of handling customer
complaints
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Activity-Based
Management (ABM)
ABM is a way of managing a business that
1) Identifies all of its major operating activities
2) Determines what resources are used in each
activity
3) Identifies what causes use of these resources for
each activity
4) Categorizes the activities as either adding value
to a product or service or being nonvalue-adding
ABM includes a management accounting
practice called activity-based costing
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Activity-Based Costing
1) A way of assigning costs that
2) Identifies all of a companys major
operating activities (both production and
nonproduction)
3) Traces costs to those activities or cost
pools
4) Assigns costs to the products or services
that use the resources supplied by those
activities
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Value- and
Nonvalue-Adding Activities
Value-adding activities
Activities that add value to a product or
service, as perceived by the customer
Nonvalue-adding activities
Activities that add cost to product or service
but do not increase its market value
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Nonvalue-Adding Activities
Nonvalue-adding activities that do not support
the organization
Are eliminated under ABM
Nonvalue-adding activities that do support the
organization
Are focal points for cost reduction
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ABM Results
Reduced costs
Reduced waste of resources
Increased efficiency
Increased customer satisfaction
ABC produces more accurate costs than
traditional cost allocation methods
Leads to improved decision making
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Theory of Constraints (TOC)
Maintains that limiting
Helps managers set
factors, or bottlenecks,
priorities for
occur during production
spending their time
of any product or service
and resources
and once
Constraints are
identified,
identified through
attention
information
and resources can be
management
focused on the
accounting
bottlenecks to achieve
provides
significant
improvements
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TOC Approach Illustrated
Anna Wang wants to increase sales of store-roasted coffees. After
reviewing management accounting reports, she concludes that
potential sales are limited by production capacity of her coffee
bean roasting equipment.
It is determined that the problem lies in the roaster
Can roast only 100 pounds of coffee beans per hour
She can rent or purchase a second roaster to overcome the
constraint
The increase in production will enable sales to increase
TOC compliments JIT, TQM, and ABM by focusing resources on
efforts that will yield the most effective improvements.
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Achieving
Continuous Improvement
Goal: Perfection by means of continuous improvement
JIT approach
Strives to eliminate wasted time, resources, and space
TQM approach
Focuses on improving the quality of the product or service and the work
environment
ABM approach
Emphasizes the ongoing reduction or elimination of nonvalue-adding
activities
TOC approach
Focuses resources on efforts that will produce the most effective
improvements
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Achieving
Continuous Improvement
JIT, TQM, ABM, and TOC are management tools for
continuous improvement
Each can be used individually
Parts of them can be combined to create a new operating
environment
Are applicable to service, manufacturing, and retail businesses
All contribute the same results in any organization
Reduction in product or service costs and delivery time
Improvement in the quality of the product or service
Increase in customer satisfaction
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The Continuous
Improvement Environment
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Stop & Review
Q. What is the common goal of JIT, TQM,
ABM, and TOC?
A. Continuous improvement
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Performance Measures: A Key to
Achieving Organizational Objectives
Objective 4
Explain the balanced scorecard and its
relationship to performance measures.
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Performance Measures
Quantitative tools that gauge an organizations
performance in relation to a specific goal or
expected outcome
May be financial or nonfinancial
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Financial
Performance Measures
Return on investment
Net income as a percentage of sales
Costs of poor quality as a percentage of
sales
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Financial
Performance Measures (contd)
Use monetary information to gauge the
performance of a profit-generating
organization or its segments
Divisions
Product lines
Sales Territories
Operating activities
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Nonfinancial
Performance Measures
Types:
Number of times an activity occurs
Time taken to perform a task
Number of customer complaints
Number of orders shipped the same day
Time taken to fill an order
Nonfinancial performance measures are useful in reducing or
eliminating waste and inefficiencies in operating activities.
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Using Performance Measures
in the Management Process
Planning stage
Establish performance measures that will support
the organization's mission and objectives of its
business plan
Reducing costs and increasing quality, efficiency,
timeliness, and customer satisfaction
Performing stage
Performance measures guide and motivate the
performance of employees and assist with assigning
costs to products, departments, or operating
activities
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Using Performance Measures
in the Management Process (contd)
Evaluating stage
Managers use the information that performance measures
provide to
Analyze significant differences between actual and planned
performance
Identify ways of improving performance
Communicating stage
Performance measurement information is useful in
communicating performance evaluations and developing
new budgets
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The Balanced Scorecard
To achieve its mission and
objectives an organization
must
Identify the areas in which it needs to excel
Establish measures of performance in these critical
areas
Use financial and nonfinancial measures
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The Balanced Scorecard (contd)
A framework that links the perspectives of an
organizations four stakeholder groups to the
organizations mission, objectives, resources,
and performance measures
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The Balanced Scorecard (contd)
More than one group may
be interested in the same
performance objective
Stakeholders of internal processes and customer
perspectives are both interested in performance
that results in high-quality products
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The Balanced Scorecard
for Good Foods Store*
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Benchmarking
To ensure its success, a
company must also
compare its performance
with that of similar
companies in the same
industry
Benchmarking
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Benchmarking (contd)
Technique for determining a company's
competitive advantage by comparing its
performance with that of its closest
competitors
Benchmarks are measures of the
best practices in an industry
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Stop & Review
Q. Are nonfinancial performance measures ever
expressed in monetary terms?
A. No, only financial performance measures use
monetary information to gauge performance.
Nonfinancial performance measures use
information that is not the result of monetary
transactions, such as the number of times an activity
occurs and the time taken to perform a task.
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Analysis of Nonfinancial Data
in a Retail Organization
Objective 5
Prepare an analysis of nonfinancial data.
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Analysis of Nonfinancial Data
in a Retail Organization (contd)
Lucy Bass supervises checkout procedures at Good Foods
Store. The store has three registers to record customer
sales. In the past, each register served an average of 30
customers per hour. On November 1, 20x9, Bass
implemented a new scanning procedure that reduced the
number of customers served per hour.
Data was collected on the number of customers
served for the three-month period ending
December 31, 20x9.
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Analysis of Nonfinancial Data (contd)
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Analysis of Nonfinancial Data
in a Retail Organization (contd)
The service rate decreased in
November
Decembers average is higher than
Novembers
This means the register clerks, as a
group, are becoming more accustomed
to the new procedure
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Stop & Review
Q. What nonfinancial data might be used to
measure performance for a parcel delivery
service?
A. The number of packages delivered per hour
or the number of miles driven per day.
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Standards of Ethical Conduct
Objective 6
Identify the standards of ethical conduct
for management accountants.
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Managements Responsibility
Responsible to external parties for the proper
use of organizational resources and the
financial reporting of their actions
Conflicts of interest between
external parties can create
ethical dilemmas for
management and for accountants
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Standards of Ethical
Conduct Illustrated
A company purchases a device to extract
pollutants from the production process
Conflicting Objectives?
To protect the community (external parties)
To maximize profits for stockholders
Examine
Options
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Standards of Ethical
Conduct (contd)
OPTIONS
Purchase more
expensive device
Greater protection for
the community but
profits will decline
Benefits to community >
Benefits to owners
Purchase less
expensive device
Achieve higher profits
for owners, but will not
protect community as
well
Benefits to owners >
Benefits to community
Ethical dilemma exists for managers over which device to
purchasethe more expensive device or the less expensive device
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Standards of Ethical
Conduct (contd)
Managers must adhere to the highest standards
of performance in order to be viewed credibly
by the various parties that rely on the
information they provide
Institute of Management Accountants (IMA) has
issued standards of ethical conduct
For practitioners of management accounting and
financial management
Purpose is to provide guidance
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Standards of Ethical Conduct for
Practitioners of Management Accounting
and Financial Management
Practitioners of management accounting and
financial management have an obligation to
The public, their profession, the organization
they serve, and to themselves
Maintain the highest standards of ethical
conduct
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IMA Standards of Ethical Conduct
Competence
Ongoing development of knowledge and skills
Follow relevant laws, regulations, and technical standards
Analyze and report relevant and reliable information
Confidentiality
Only disclose confidential information when authorized or required by
law
Inform subordinates of confidentiality and monitor their activities to
ensure confidentiality
Objectivity
Communicate information fairly and objectively
Disclose all relevant information
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IMA Standards of
Ethical Conduct (contd)
Integrity
Avoid conflicts of interest
Avoid activities that might prejudice the ability to carry out duties
ethically
Refuse gifts, favors, or hospitality that would influence or appear to
influence actions
Avoid activities that would undermine attaining legitimate and ethical
objectives of the organization
Recognize and communicate professional limitations
Communicate favorable and unfavorable information and present
professional judgments or opinions
Do not discredit the profession
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Stop & Review
Q. What are the four standards for ethical
conduct of practitioners of management
accounting and financial management?
A. Competence
Confidentiality
Integrity
Objectivity
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Chapter Review
1. Distinguish management accounting from
financial accounting and explain how
management accounting supports the
management process.
2. Describe the value chain and its usefulness
in analyzing a business.
3. Identify the management tools used for
continuous improvement.
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Chapter Review (contd)
4. Explain the balanced scorecard and its
relationship to performance measures.
5. Prepare an analysis of nonfinancial data.
6. Identify the standards of ethical conduct for
management accountants.
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