UCF-ACG2071 Study Guide Test 1

UCF-ACG2071 Study Guide Test 1 - #1 ChapterOne...

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ACG 2071 Study Guide Test #1 Chapter One Manager’s Three Responsibilities- planning, directing, controlling o Planning Activities Develop company objectives Short-term (operational) planning- less than 1 year  Long-term (strategic) planning- more than 1 year Often use budgets and pro-forma financial statements o Directing Activities Decisions made by managers related to running the day to day operations  of a business Examples include preparing work schedules, purchasing decisions, pricing decisions, small decisions effecting customers, etc. o Controlling Activities To make sure goals are met  Monitor and evaluate organizational performance Examples include performance reports which compare budgeted vs. actual information Differences between financial and managerial accounting o Managerial accounting is primarily meant to be used within a company o Financial accounting is for external users and is governed by lots of rules
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Organizational structure of a typical company o The board of directors meets periodically so they hire a CEO to manage the  company on a day-to-day basis. The CEO hires a COO and a CFO to manage  various aspects of the organization. The COO is responsible for research and  design, production, and distribution. The CFO is responsible for all of the  company’s financial concerns. The treasurer and controller report directly to the  CFO. The treasurer is responsible for raising capital (by issuing stocks and bonds) and investing funds. The controller is responsible for general financial accounting, managerial accounting, and tax reporting. Many companies have an audit  committee that reports directly to the board of directors. The audit committee  oversees the internal audit function of the organization. Sarbanes-Oxley Act o The purpose of the SOX is to restore trust in publicly traded corporations, their  management, their financial statements, and their auditors.  o CEO and CFO assume responsibility for the company’s financial statements,  internal control system, and procedures for financial reporting. o Audit committee must be independent and should include a financial expert.  o New requirements for CPA firms, including limited non-audit services for clients  and periodic quality review. o Stiffer punishment for white-collar crimes. Previously paid CEO and CFO  bonuses can be recovered if financial statements were improperly stated due to  misconduct.
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IFRS and XBRL o International Financial Reporting Standards (IFRS) is a set of reporting standards  that many overseas countries use. The United States FASB is working with IASB 
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