LO 1.2Indicate whether each statement describes financial accounting or managerial accounting.
- The information is directed at external users who are making decisions pertaining to investing, extending credit, and other decisions.
- The principal users are the organization’s managers.
- The key focus is on the entity as a whole.
- The rules and principles are very flexible.
- The information gathered is usually available after an independent audit has been completed.
LO 1.2Identify the following as True or False:
- Managerial accounting reports must comply with the rules set in place by the FASB.
- Financial accounting reports are typically general-purpose reports.
- Financial accounting reports pertain to the entity as a whole, whereas managerial accounting focuses more on subunits of the organization.
- The main users of the financial accounting information are the internal users.
- Managerial reports are prepared on an as-needed basis.
- Financial accounting reports often must be audited at least annually by an independent auditor.
LO 1.2Define each of these users of accounting information as an internal user of external user:
- Tax authorities
LO 1.2Discuss what information would be most useful for these users of accounting information:
- Tax authorities
LO 1.3Taylor Speedy has prepared the following list of statements about managerial accounting, financial accounting, and the functions of management. Identify each statement as true or false.
- Financial accounting centers on providing information to internal users.
- Staff positions are directly involved in the company’s primary revenue-generating activities.
- Preparation of budgets is part of financial accounting.
- Managerial accounting applies only to merchandising and manufacturing companies.
- Both managerial accounting and financial accounting deal with many of the same economic events.
LO 1.3Match the term with the description:
|A. Certified Public Accountant||i. Specialist in corporate accounting management; favors financial analytics, budgeting, and strategic domains|
|B. Chartered Financial Analyst||ii. Considered the top tier in accounting certifications; must pass a four-part exam, with education and work experience requirements|
|C. Certified Management Accountant||iii. Designation that is exclusively for auditors of the public sector|
|D. Certified Internal Auditor||iv. Credential for auditors who work within organizations and is one of a few that is accepted worldwide|
|E. Certified Fraud Examiner||v. Certification for those with a career in finance and investment areas|
|F. Certified Government Auditing Professional||vi. Designation that proves proficiency in fraud prevention, detection, and deterrence|
LO 1.4After the passage of the Sarbanes-Oxley Act in 2002, many new responsibilities were put into place for organizations and their management. What are the four significant issues that were addressed by the act and its provisions as presented in this chapter? How does the act and its various requirements help deter fraudulent activity?
LO 1.4Indicate whether each of the following statements is true or false.
- Bribery in the world of business typically happens when an organization or representative of an organization gives financial benefits to an official to gain favor or manipulate a business decision.
- The Foreign Corrupt Practices Act was implemented in the aftermath of disclosures that businesses were violating the IMA Code of Ethics.
- Managers are required to follow specific rules issued by the IMA for internal financial reporting.
- Ethics is more than obeying laws.
- The Sarbanes-Oxley Act addressed public company accounting reform.
LO 1.5Match each lean business method to the best description:
|A. Just-in-time manufacturing||i. The focus is on quality throughout the entire process.|
|B. Continuous improvements||ii. Inventory is attained or produced only as needed.|
|C. Total quality management||iii. A combined effort of team members is used to eliminate waste and defects.|
|D. Lean Six Sigma||iv. All managers and employees are always looking for ways to improve operations.|
LO 1.5For each of the activities listed, choose the manufacturing concept that applies: (i) just-in-time inventory, (ii) continuous improvement, or (iii) total quality management.
- A company receives inventory daily based on customer orders.
- Manufacturing factories have been arranged in such a fashion to reduce inefficiencies.
- Companies organize customer focus groups in order to look at customer needs and expectations.
- The entire production process is standardized and written down with procedures.
- Each customer receives a survey of satisfaction with their product.
- All orders are complete and shipped within three business days.
LO 1.5Look up the definitions for the following terms:
- Budget (Budgeting)
- Capital budget (Capital Budgeting Decisions)
- Balanced scorecard (Balanced Scorecard and Other Performance Measures)
- Break-Even point (Cost Volume Profit Analysis)
Provide examples of how each of these terms is used in your own life and how using these practices is useful.