...MEMO To: CEO From: Accounting Manager Date: February 19, 2013 Re: Need for internal managerial accountant Dear Chief Executive Officer, This is a memo that will state the reasons why and benefits of hiring another managerial accountant. As we all know, the significance of a trustworthy accounting department is essential in any business. Accounting is specifically the most important department of a business for the simple fact that it deals with the company’s money statuses. This includes where a business can and can’t go financially and what it has and has not accomplished in terms of financial objectives. It is essential that a business have a strong internal accounting system because it can mean monetary success or failure. An internal accounting system includes the maintenance of the company’s finances in terms of short as well as long-term goals, strategy formulation for revenue, operational direction and control of the company’s finances, and the organization of resources and assets aligned with the desired budget within the company. All of these duties will be separated and given specifically to the new internal accounting manager. It is desired that a position be made specifically for these duties because of the importance in the company’s finances. One can not get too overwhelmed with other aspects and/or factors within the company to make mistakes or over or under budget the company. There should be a main focus so there are no unanalyzed risks involved. (Wild and...
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...Goal of Managerial Accounting http://edugen.wileyplus.com/edugen/courses/crs4637/rc/jiambalvo3341c... GOAL OF MANAGERIAL ACCOUNTING LEARNING OBJECTIVE 1 State the primary goal of managerial accounting. Virtually all managers need to plan and control their operations and make a variety of decisions. The goal of managerial accounting is to provide the information they need for planning, control, and decision making. If your goal is to be an effective manager, a thorough understanding of managerial accounting is essential. Planning LEARNING OBJECTIVE 2 Describe how budgets are used in planning. Planning is a key activity for all companies. A plan communicates a company's goals to employees aiding coordination of various functions, such as sales and production.A plan also specifies the resources needed to achieve company goals. Budgets for Planning The financial plans prepared by managerial accountants are referred to as budgets. A wide variety of budgets may be prepared. For example, a profit budget indicates planned income, a cash-flow budget indicates planned cash inflows and outflows, and a production budget indicates the planned quantity of production and the expected costs. Consider the production budget for Surge Performance Beverage Company. In the coming year, the company plans to produce 5,000,000 12-ounce bottles. This amount is based on forecasted sales. To produce this volume, the company estimates it will spend $1,500,000 on bottles, $400,000...
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...Introduction to Accounting Why Study Accounting? Engineering Accounting • Accounting is pervasive • Used in all types of organizations An Overview Richard S. Barr – For-profit companies – Not-for-profit companies – Governmental organizations 1 2 Organizations Accounting Common characteristics: • An objective or group of objectives • A set of strategies to achieve its objectives • Managers • A key element of management • You must understand what is being reported – – • Managers' performance is often measured by accounting data • This data is used for decision making • An organizational structure – • A need for information 3 Accounting Systems 4 Types of Information • Are the primary quantitative information system in most organizations In accounting systems: • Attention-directing – – Types of information – Purposes of accounting systems • Problem-solving – • Scorekeeping – 5 6 1 Introduction to Accounting Purposes of Acctg Systems Accounting Systems • Internal reporting to managers for planning and control • Internal reporting for special decisions, policies, and long-range plans • External reporting Four Standard Types 7 8 Types of Accounting Systems Financial Accounting 1. 2. 3. 4. • Primarily for the external decision maker Financial Tax Management Cost – – – • External reporting follows legal and GAAP requirements • Objective:...
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...Introduction to Managerial Accounting Regardless of your major or intended career path, most of you will become managers one day. A manager has responsibility and control of selected parts of a company’s operations, or in some cases, multiple aspects of operations. Only those of you that happen to stay at the ‘bottom’ of a company, prefer never to get promoted, or never accept any responsibility for some aspect of a business, will miss the ‘management’ opportunity. Fortunately, none of you will likely fall into this persona given that you have taken the initiative to attend college. Understanding managerial accounting will help you move up the ladder more quickly, regardless of your chosen career path. How Can Managerial Accounting Help You? In any responsible business capacity, your boss and all other management levels above you will want to know how well you handle your responsibilities. To do so requires that they measure your performance. The evaluation process is similar to your perceptions in each college course in which you enroll. During your first class meeting in each course, one of your initial goals is to find out how your performance will be evaluated. In a business environment, you want to know what they expect, i.e., how they will measure your performance. While you won’t be earning letter grades in the business world, your performance will ultimately translate into promotions, bonuses, raises, reprimands, or perhaps dreaded walking...
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...Chapter 1 Introduction to Managerial Accounting Regardless of your major or intended career path, most of you will become managers one day. A manager has responsibility and control of selected parts of a company’s operations, or in some cases, multiple aspects of operations. Only those of you that happen to stay at the ‘bottom’ of a company, prefer never to get promoted, or never accept any responsibility for some aspect of a business, will miss the ‘management’ opportunity. Fortunately, none of you will likely fall into this persona given that you have taken the initiative to attend college. Understanding managerial accounting will help you move up the ladder more quickly, regardless of your chosen career path. How Can Managerial Accounting Help You? In any responsible business capacity, your boss and all other management levels above you will want to know how well you handle your responsibilities. To do so requires that they measure your performance. The evaluation process is similar to your perceptions in each college course in which you enroll. During your first class meeting in each course, one of your initial goals is to find out how your performance will be evaluated. In a business environment, you want to know what they expect, i.e., how they will measure your performance. While you won’t be earning letter grades in the business world, your performance will ultimately translate into promotions, bonuses, raises, reprimands, or perhaps dreaded walking...
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...CHAPTER 1 COVERAGE OF LEARNING OBJECTIVES FUNDAMENTAL ASSIGNMENT MATERIAL CRITICAL THINKING EXERCISES AND EXERCISES 30, 31 CASES, EXCEL, COLLAB., & INTERNET EXERCISES 52, 55 LEARNING OBJECTIVE LO1: Explain why accounting is essential for decision makers and managers. LO2: Describe the major users and uses of accounting information. LO3: Explain the role of budgets and performance reports in planning and control. LO4: Describe the cost-benefit and behavioral issues involved in designing an accounting system. LO5: Discuss the role accountants play in the company’s value chain functions. LO6: Identify current trends in management accounting. LO7: Explain why ethics and standards of ethical conduct are important to accountants. PROBLEMS A1, B1 28, 29, 33 39, 40, 42 55 A2, B2 32 45 53 41, 43 A1, B1 30, 31, 34, 35, 39, 42, 44, 46 36 54 A3, B3 37, 38 47, 48, 49 51, 52, 55 Copyright ©2014 Pearson Education, Inc., Publishing as Prentice Hall. 1 CHAPTER 1 Managerial Accounting, the Business Organization, and Professional Ethics 1-A1 (10-15 min.) Information is often useful for more than one function, so the following classifications for each activity are not definitive but serve as a starting point for discussion: 1. Scorekeeping. A depreciation schedule is used in preparing financial statements to report the results of activities. 2. Problem solving. Helps a manager assess the impact of a purchase decision. 3. Scorekeeping....
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...Accounting Scenario XBCOM/230 Version 1 1 University of Phoenix Material Accounting Scenario Situation Riordan Manufacturing wants to acquire the JJJ Company and has formed a confidential ad hoc committee to perform several functions, including due diligence of JJJ Company. The ad hoc committee was appointed by the chairman of the board (COB) of Riordan. Members of the committee are familiar with one another and have worked together in the past in various capacities. Accounting Team Representatives John and Beth are both from the accounting team and have reviewed the files for JJJ Company and are preparing to report their findings to the chief executive officer (CEO) and COB. They are not sure JJJ is financially stable enough to move forward with the acquisition. John graduated with a BA in Accounting from University of Phoenix in 1990. He joined Riordan in 2004 as a staff accountant and was promoted to accounting manager in 2007. He is a democratic leader whose focus is on sales profitability. Beth graduated with a BA in Accounting from University of Phoenix in 2008; she came to Riordan in 2007 as an accounting assistant after graduation. She was recently promoted to staff accountant by John, the accounting manager. William is the CEO of Riordan and he wants to do the acquisition—but only if it means greater profits for the company and bigger dividends for the stockholders. Although he understands business, he relies on John’s advice for the details...
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...RESPONSIBILITY ACCOUNTING Management Accounting - Responsibility Accounting Planning & control are essential for achieving good results in any business. Firstly, a budget is prepared and, secondly, actual results are compared with budgeted ones. Any difference is made responsibility of the key individuals who were involved in (i) setting standards, (ii) given necessary resources and (iii) powers to use them. In order to streamline the process, the entire organization is broken into various types of centers mainly cost centre, revenue centre, profit center and investment centre. The organizational budget is divided on these lines and passed on to the concerned managers. Actual results are collected and displayed in the same form for comparison. Difference, if any, are highlighted and brought to the notice of the management. This process is called Responsibility Accounting. RESPONSIBILITY CENTRE A FORMAL DEFINITION OF RESPONSIBILITY ACCOUNTING Responsibility accounting involves the creation of responsibility centres. A responsibility centre may be defined as an organization unit for whose performance a manager is held accountable. Responsibility accounting enables accountability for financial results and outcomes to be allocated to individuals throughout the organization. The objective is to measure the result of each responsibility center. It involves accumulating costs and revenues for each responsibility centre so that deviation from performance target (typically...
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...CHAPTER 1 MANAGERIAL ACCOUNTING IN THE INFORMATION AGE CHAPTER Introduction FINANCIAL ACCOUNTING STRESSES ACCOUNTING CONCEPTS AND PROCEDURES THAT RELATE TO PREPARING REPORTS FOR EXTERNAL USERS OF ACCOUNTING INFORMATION. IN COMPARISON, MANAGERIAL ACCOUNTING STRESSES ACCOUNTING CONCEPTS AND PROCEDURES THAT ARE RELEVANT TO PREPARING REPORTS FOR INTERNAL USERS OF ACCOUNTING INFORMATION. THIS CHAPTER PROVIDES AN OVERVIEW OF THE ROLE OF MANAGERIAL ACCOUNTING IN PLANNING, CONTROL, AND DECISION MAKING. IT ALSO DEFINES IMPORTANT COST CONCEPTS AND INTRODUCES KEY IDEAS THAT WILL BE EMPHASIZED THROUGHOUT THE TEXT. THE CHAPTER CONCLUDES WITH A DISCUSSION OF THE INFORMATION AGE AND THE IMPACT OF INFORMATION TECHNOLOGY ON BUSINESS, A FRAMEWORK FOR ETHICAL DECISION-MAKING AND THE ROLE OF THE CONTROLLER AS THE TOP MANAGEMENT ACCOUNTANT. NOTE THAT YOU CAN ENHANCE AND TEST YOUR KNOWLEDGE OF THE CHAPTER USING WILEY’S ONLINE RESOURCES, THE SELF-ASSESSMENT QUIZ AND REVIEW PROBLEMS AT THE END OF THE CHAPTER. Objectives, Terms, and Discussions LO1 State the primary goal of managerial accounting. GOAL OF MANAGERIAL ACCOUNTING Managers need to plan and control their operations and make a variety of decisions. The goal of managerial accounting is to provide the information managers need for planning, control, and decision making. LO2 Describe how budgets are used in planning. Planning A plan communicates a company's goals to employees and specifies the resources needed...
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...Journal of Accounting and Economics 7 (1985) 85-107. North-Holland THE EFFECT OF BONUS SCHEMES ON ACCOUNTING DECISIONS* Paul M. HEALY Massachusetts Institute of Technology, Cambridge, MA .02139, USA Received October 1983, final version received September 1984 Studies examining managerial accounting decisions postulate that executives rewarded by earnings-based bonuses select accounting procedures that increase their compensation. The empirical results of these studies are conflicting. This paper analyzes the format of typical bonus contracts, providing a more complete characterization of their accounting incentive effects than earlier studies. The test results suggest that (1) accrual policies of managers are related to income-reporting incentives of their bonus contracts, and (2) changes in accounting procedures by managers are associated with adoption or modification of their bonus plan. 1. Introduction Earnings-based bonus schemes are a popular means of rewarding corporate executives. Fox (1980) reports that in 1980 ninety percent of the one thousand largest U.S. manufacturing corporations used a bonus plan based on accounting earnings to remunerate managers. This paper tests the association between managers' accrual and accounting procedure decisions and their incomereporting incentives under these plans. Earlier studies testing this relation postulate that executives rewarded by bonus schemes select income-increasing accounting procedures to maximize their bonus compensation...
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...Unit 1 Introduction to Financial Accounting Learning Outcome After reading this unit, you will be able to: • Explain succinctly financial accounting concepts • Elucidate on different principles of financial accounting • Explicate the importance and scope of financial accounting • Understand Generally Accepted Accounting Principles(GAAP) • Identify limitations of Financial Accounting Time Required to Complete the unit 1. 2. 1st Reading: It will need 3 Hrs for reading a unit 2nd Reading with understanding: It will need 4 Hrs for reading and understanding a unit 3. 4. 5. Self Assessment: It will need 3 Hrs for reading and understanding a unit Assignment: It will need 2 Hrs for completing an assignment Revision and Further Reading: It is a continuous process Content Map 1.1 1.2 1.3 1.4 1.5 1.6 Introduction Role of Financial Accounting Principles of Financial Accounting Importance of Financial Accounting Benefits of Financial Accounting Limitations of Financial Accounting 1 Accounting for Managers 1.7 1.8 1.9 1.10 1.11 1.12 Accounting Principles Accounting Concepts and Conventions Accounting Standards in India and International Accounting Standards Summary Self-Assessment Test Further Reading 2 Accounting for Managers 1.1 Introduction Financial accountancy (or financial accounting) is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies...
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...Smart, Chief Operating Officer of Mitchell From: Yuxi Zhang, Accountant Subject: Responsibility Accounting Method in Corporation Operation Date: September 20, 2015 This memo is in response to your questions concerning the responsibility accounting method. The memo will first explain responsibility accounting and then discuss how to correctly applying it in operation. Finally, some precautions of system installed are provided too you. After you understanding responsibility accounting method, you will be better able to decide whether you want to install for the company. What Is Responsibility Accounting? Based on Managerial Cost Accounting Implementation Guide, the definition of responsibility accounting is: “Collection, summarization, and reporting of financial information about various decision centers (responsibility centers) throughout an organization; also called activity accounting or profitability accounting. It traces costs, revenues, or profits to the individual managers primarily responsible for making decisions about the costs, revenues, or profits in question and taking appropriate actions. Responsibility accounting is appropriate where top management has delegated authority to make decisions. The idea being that each manager’s performance should be judged by how well he or she manages those items under his or her control.” The responsibility accounting system is based on the idea that proper management should take place as closely to the departments...
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...place while the glue dries, and machine vision systems check for defects. The engineering and design team uses computerised drafting and testing of new products. The following managers work in the tennis rackets division: Jason Dennis, Sales Manager (supervises all sales representatives) Dave Marley, Cost Accounting Manager (supervises cost accountants) Kevin Carson, Production Supervisor (supervises all manufacturing employees) Sally Renner, Engineer (supervises all new-product design teams) REQUIRED a) What are the primary information needed by each manager? Give examples. (5 Marks) b) Which, if any, financial accounting report(s) is likely to be used by each manager? Explain. (3 Marks) c) Name one special purpose management accounting report that could be designed for each manager. Include the name of the report, the information it would contain, and how frequently it should be issued. (7 Marks) [TOTAL 15 MARKS] Grading Rubrics for Assignment Question 1: (5) (4) a) primary Clear and Clear and information detailed adequate needed by explanation of explanation of each the primary the primary manager information information needed by needed by weightage: 1 each manager each manager with some with some examples. examples. b) financial Clear and Clear and accounting detailed adequate report(s) explanation of explanation of the...
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...CHAPTER 1 The Changing Role of Managerial Accounting in a Dynamic Business Environment ANSWERS TO REVIEW QUESTIONS 1-1 The explosion in e-commerce will affect managerial accounting in significant ways. One effect will be a drastic reduction in paper work. Millions of transactions between businesses will be conducted electronically with no hard-copy documentation. Along with this method of communicating for business transactions comes the very significant issue of information security. Businesses need to find ways to protect confidential information in their own computers, while at the same time sharing the information necessary to complete transactions. Another effect of e-commerce is the dramatically increased speed with which business transactions can be conducted. In addition to these business-to-business transactional issues, there will be dramatic changes in the way managerial accounting procedures are carried out, one example being e-budgeting, which is the enterprise-wide and electronic completion of a company’s budgeting process. 2. Plausible goals for the organizations listed are as follows: (a) Amazon.com: (1) To achieve and maintain profitability, and (2) to grow on-line sales of books, music, and other goods. (b) American Red Cross: (1) To raise funds from the general public sufficient to have resources available to meet any disaster that may occur, and (2) to provide assistance to people who are victims of a disaster...
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...Unit 1 Introduction to Financial Accounting Learning Outcome After reading this unit, you will be able to: • Explain succinctly financial accounting concepts • Elucidate on different principles of financial accounting • Explicate the importance and scope of financial accounting • Understand Generally Accepted Accounting Principles(GAAP) • Identify limitations of Financial Accounting Time Required to Complete the unit 1. 2. 1st Reading: It will need 3 Hrs for reading a unit 2nd Reading with understanding: It will need 4 Hrs for reading and understanding a unit 3. 4. 5. Self Assessment: It will need 3 Hrs for reading and understanding a unit Assignment: It will need 2 Hrs for completing an assignment Revision and Further Reading: It is a continuous process Content Map 1.1 1.2 1.3 1.4 1.5 1.6 Introduction Role of Financial Accounting Principles of Financial Accounting Importance of Financial Accounting Benefits of Financial Accounting Limitations of Financial Accounting 1 Accounting for Managers 1.7 1.8 1.9 1.10 1.11 1.12 Accounting Principles Accounting Concepts and Conventions Accounting Standards in India and International Accounting Standards Summary Self-Assessment Test Further Reading 2 Accounting for Managers 1.1 Introduction Financial accountancy (or financial accounting) is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies...
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