Acc202 Exam 1 - Chapter 1 Globalization o Improvements have...

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Chapter 1 Globalization o Improvements have made the world more connected and increased imports/exports o Aside from creating more competition for companies based in US (from china, etc.) creates more opportunities for companies to enter new markets Strategy o Customer Value Propositions – Reasons someone chooses one company over another Customer Intimacy Company understands customer Operational Excellence Convenience to customer Product Leadership Higher quality to customer The Work of Management and the Need for Managerial Accounting Information o Managers carry out 3 major activities Planning – establishing a basic strategy, selecting a course of action, and specifying how the action will be implemented Directing and Motivating – Involves mobilizing people to carry out plans and run routine operations Controlling – Involves ensuring that the plan is actually carried out and is appropriately modified as circumstances change o Managerial Accounting is most important for planning and controlling o Planning In general, managerial accounting data is essential in estimating the process impact revenues or costs Budgets – Prepared annually and represent management’s plans in specific, quantitative terms Controller – The manager in charge of accounting dept o Controlling Control – Managers seek to ensure that the plan is being followed Feedback – Signals whether operations are on track, is key to effective control Performance Report – suggest where operations are not proceeding as planned and where some parts of the organization may require additional attention o The Planning and Control Cycle (page 8) Involves the smooth flow of management activities from planning through directing and motivating, controlling, and then back to planning again Decision making (hub) is involved in all these activities Comparison of Financial and Managerial Accounting o Emphasis on the Future
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Managerial Accounting has planning, while Financial Accounting summarizes past financial transactions o Relevance of Data Managerial accountants want information that is relevant Relevant – Appropriate for the problem at hand o Less Emphasis on Precision Managerial accountants place much more weight on nonmonetary data (customer satisfaction) o Segments of an Organization Managerial accounting focus more on segments of company Segments – Product lines, sales territories, divisions, departments, etc. Primary emphasis in reports o GAAP Managerial accounting does not use GAAP 1 constraint Expected benefits from using the information should outweigh the costs of collecting, analyzing, and summarizing the data o Managerial Accounting Not Mandatory Organizational Structure (Exhibits 1-3 and 1-4) o Decentralization The delegation of decision-making authority throughout an organization by giving managers the authority to make decisions
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