Ch01 - Chapter 1 Managerial Accounting in the Information...

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Unformatted text preview: Chapter 1 Managerial Accounting in the Information Age QUESTIONS 1. The goal of managerial accounting is to provide information needed for planning, control, and decision making. 2. The planning and control process begins with the development of a plan. Managers take actions to implement the plan and the results of their actions are evaluated by comparing actual results to the plan. Evaluation supports control of the organization. Anticipating that the evaluation process will affect rewards/punishments, managers work to achieve planned results. The evaluation process may also identify operations that need to be changed or indicate that plans should be revised. 3. Budgeted performance is a useful benchmark for evaluating current period performance. 4. This question asks students to identify three differences between financial and managerial accounting. In the text, five differences are noted: 1. Managerial accounting is directed at internal rather than external users of accounting information. 2. Managerial accounting may deviate from generally accepted accounting principles (GAAP). 3. Managerial accounting may present more detailed information. 4. Managerial accounting may present more nonmonetary information. 5. Managerial accounting places more emphasis on the future. 5. Examples of nonmonetary information that might appear in managerial accounting reports include: the quantity of material consumed in production, the number of hours worked by the office staff, and the number of product defects. 6. Variable costs change in proportion to business activity while fixed costs do not change. 7. Salaries of the home appliance sales force would be a controllable cost for the manager of the home appliance department at a Sears’ store. Depreciation related to the department store building would be a noncontrollable cost. 8. Incremental analysis involves a comparison of the revenues that change and the costs that change when a decision alternative is selected. If incremental revenue exceeds incremental cost, a decision alternative should be undertaken. 9. “You get what you measure!” suggests that managers’ behaviors are affected by performance measures. 10. The controller and the treasurer report to the chief financial officer (CFO). Jiambalvo Managerial Accounting 11. Information flows up and down the value chain—between a company and its suppliers and between a company and its customers. Information technology is helping companies track buying patterns of customers and send targeted selling messages to them via email. Information technology is also helping companies better manage their supply chains and gain internal efficiencies. 12. A legal action is not necessarily ethical. Ethical actions involve “what’s right” while legal actions involve operating within boundaries of the law....
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This note was uploaded on 09/15/2011 for the course ACCT 614 taught by Professor Unknown during the Spring '10 term at Alabama State University.

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Ch01 - Chapter 1 Managerial Accounting in the Information...

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