Ch01 - CHAPTER 1 Introduction to Cost Accounting QUESTIONS...

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CHAPTER 1 Introduction to Cost Accounting QUESTIONS 1. Management accounting stresses the in- formational needs of internal users over those of external users (the focus of finan- cial accounting). Because of this perspect- ive, management accounting provides in- formation in a format that is flexible and rel- evant to a particular manager’s usage. Fin- ancial accounting, on the other hand, must provide some uniformity in the manner in which information is presented for it to be comparable among companies and in com- pliance with generally accepted accounting principles. 2. Operating in a global environment means that more decision and control variables must be tracked. For example, a firm oper- ating in many countries must track variables such as national rules of income taxation, national corporate governance laws, sets of local laws of commerce, production and sourcing sites, and currencies. In addition, the multinational firm must monitor markets in many countries, deal with a multitude of local cultures and customs, and communic- ate in several languages. Some other valuable information for the global firm would be: currency exchange rates; national inflation rates; details of im- port/export laws; prices for commodities in likely sourcing sites; distribution costs for various modes of moving goods, compon- ents, equipment, and materials; political is- sues in all relevant markets; and competit- ors’ prices in all markets. These types of in- formation are important to generate an op- timal return on capital. 3. A mission statement is important to an or- ganization because it provides a clearly worded view of what the organization wants to accomplish and how the organization uniquely meets its targeted customers’ needs with products and services. Without a mission statement an organization may veer away from its “view of itself” and find that it is engaging in activities that are not, and can never be, part of what it wants to do. 4. Organizational strategy is the link between a firm’s goals and objectives and its operation- al plans. Strategy is therefore a specification of how a firm intends to compete and sur- vive. Each organization will have a unique strategy because it has unique goals, ob- jectives, opportunities, and constraints. 5. Core competencies are the special profi- ciencies possessed and valued by an organ- ization. If a particular strategy requires core competencies that are not possessed by a firm, executing such a strategy would be very difficult. For example, a strategy of di- versification would be impossible to execute in a firm that does not possess core compet- encies in mergers, acquisitions, and con- straints. 6. The value chain of an organization is the set of processes that converts inputs into products and services for the firm’s custom- ers. The value chain includes both internal and supplier processes, and it creates the foundation of strategic resource manage- ment (SRM) which involves the deployment
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This note was uploaded on 02/28/2009 for the course ACCTG 1 taught by Professor Lupin during the Spring '09 term at De La Salle Lipa.

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Ch01 - CHAPTER 1 Introduction to Cost Accounting QUESTIONS...

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