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Management Accounting
It measures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization.
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Financial Accounting
Its focus is on reporting to external parties. It measures and records business transactions.
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Implementing strategy
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Current Assets
Intangible Assets
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Planning
Feedback
Setting goals
Predicting results
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These are reports that compare actual results with budgeted amounts.
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Budget Revenues $59,000 Cost of goods sold 42,000 Wages 6,700 General 1,300 Fixed costs 5,000 Operating income $ 4,000
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Feedback
This involves managers examining past performance and systematically exploring alternative ways to make better informed decisions in the future.
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Distinguish among the problemsolving, scorekeeping, and attention-directing roles of management accountants.
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Problem Solving
This involves comparative analysis for decision making. This role asks: Of the several alternatives available, which is the best?
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Scorekeeping
This involves accumulating data and reporting reliable results to all levels of management. This role asks: How is the business doing?
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Attention Directing
This involves helping managers properly focus their attention.
This role asks: Which opportunities and problems should be emphasized first. Attention directing should focus on all opportunities to add value to an organization, not just cost-reduction opportunities.
2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster
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Customer Focus
The challenge facing managers is to continue investing sufficient (but not excessive) resources in customer satisfaction such that profitable customers are attracted and retained.
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Value Chain
The term value chain refers to the sequence of business functions in which usefulness is added to the products or services of an organization. The term value is used because as the usefulness of the product or service is increased, so is its value to the customer.
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Value Chain
Management accountants provide decision support for managers in the following six business functions:
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Value Chain
R&D Design Production
Management Accounting
Marketing
Distribution
Service
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Key Guidelines
1. Cost-benefit approach
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Cost-Benefit Approach
A cost-benefit approach should be used in order to spend resources if they promote decision making that better attains organization goals in relation to the costs of those resources.
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Controller
Audit
Tax
Treasury
Risk Management
Investor Relations
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Examples of Functions:
* Royalties * General Ledger * Accounts Payable and Receivable * Subsidiary and Liaison Accounting
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