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Managerial Accounting Exam #1 questions with correct answers respectively.
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Managerial Accounting Exam #1questions with correct answers
respectively.
Differences between Financial and Managerial Accounting ANS - There are seven key differences
between financial accounting and managerial accounting:
Users: Financial accounting reports are prepared for external parties, whereas managerial accounting
reports are prepared for internal users.
Emphasis on the future: Financial accounting summarizes past transactions. Managerial accounting has
a strong future orientation.
Relevance of data: Financial accounting data should be objective and verifiable. Managerial accountants
focus on providing relevant data even if these data are not completely objective and verifiable.
Less emphasis on precision: Financial accounting focuses on precision when reporting to external
parties. Managerial accounting aids decision makers by providing good estimates as soon as possible
rather than waiting for precise data later.
Segments of an organization: Financial accounting is concerned with companywide reports. Managerial
accounting focuses on the segment reports. Examples of segments include: product lines, sales
territories, divisions, departments, etc..
Managerial accounting-no externally imposed rules: Financial accounting conforms to GAAP and IFRS.
Managerial accounting is not bound by GAAP and IFRS.
Managerial accounting-not mandatory: Financial accounting is mandatory because various outside
parties require periodic financial statements. Managerial accounting is not mandatory.
Segment ANS - Segments of an organization: Financial accounting is concerned with companywide
reports. Managerial accounting focuses on the segment reports. Examples of segments include: product
lines, sales territories, divisions, departments, etc..
Three main functions of management: Planning, Controlling, and Decision Making ANS - Planning
involves establishing goals and specifying how to achieve them. Plans are often accompanied by a
budget.
, Controlling involves gathering feedback to ensure that the plan is being properly executed or modified
as circumstances change. Part of the control process includes preparing performance reports. A
performance report compares budgeted to actual results to improve future performance.
Decision making involves selecting a course of action from competing alternatives.
Many managerial decisions revolve around answering three questions:
a. What should we be selling?
b. Who should we be serving?
c. How should we execute?
Budget ANS - A budget is a detailed plan for the future that is usually expressed in formal quantitative
terms.
Strategy ANS - A strategy is a "game plan" that enables a company to attract customers by
distinguishing itself from competitors.
Business process ANS - A business process is a series of steps that are followed in order to carry out
some task in a business.
Value chain ANS - A value chain consists of the major business functions that add value to a company's
products and services.
Lean production (also known as JIT) ANS - Lean production is a management approach that organizes
resources such as people and machines around the flow of business processes and that only produces
units in response to customer orders.
Lean production is often called just-in-time (JIT) production because products are only made in response
to customer orders and they are completed just-in-time to be shipped to customers.
Constraint ANS - A constraint (also called a bottleneck) is anything that prevents you from getting more
of what you want. The constraint in a system is determined
by the step that has the smallest capacity.
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