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Book Outline - Chapter1: 16:22:00 Financial Managerial...

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Chapter 1: Managerial Accounting 29/08/2010 16:22:00 Managerial Accounting Basics     Field of accounting that provides economic and financial information for  managers and other internal users Comparing Managerial Accounting and Financial Accounting
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Financial  Accounti ng Managerial  Accounting External users:  stockholders, creditors,  regulators Primary  Users of  Reports Internal users: officers  and managers Financial Statements Quarterly and Annually Type and  Frequenc y of  Reports Internal reports As frequently as needed General-purpose Purpose  of  Reports Special-purpose for  specific decisions Pertains to business as  a whole Highly aggregated Limited to double-entry  accounting and cost  data GAAP Content  of  Reports Pertains to subunits of the  business Very detailed Extends beyond double- entry accounting to any  relevant data Standard is relevance to  decisions
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Audit by CPA Verificati on  Process No independence audits
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Management Functions o Planning o Directing o Controlling Organizational Structure o Stockholders own the company o The board of directors manages it on their behalf o CEO has overall responsibility for managing the business o Types of Employees Line positions  directly involved in the company’s primary  revenue-generating operating activities VPs, plant managers, supervisors, production personnel Staff positions  involved in activities that support the efforts of  the line employees Finance, legal, HR o Controller  reports to the CFO, maintains the accounting records,  maintains an adequate system of internal control, and prepares  financial statements, tax returns, and internal reports Business Ethics o Sarbanes-Oxley Act of 2002 (SOX)  legislation enacted to help  prevent lapses in internal control; clarified top management’s  responsibility for the company’s financial statements Managerial Cost Concepts     Manufacturing Costs o Direct Materials  raw materials that can be physically and directly  associated with the finished product o Indirect materials  do not physically become part of the finished  product or they cannot be traced because their physical association  with the finished product is too small in terms of cost
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Account for indirect materials as a part of manufacturing  overhead o direct labor  the work of factory employees that can be physically  and directly associated with converting raw material into finished goods o Indirect labor  refers to the work of employees that has no physical  connection with the finished product o Manufacturing Overhead
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