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 anywhere in the country on short notice.

(c) General Motors: (1) To earn income sufficient to provide a good return on the investment of the company's stockholders, and (2) to provide the highest-quality product possible.

(d) Wal-Mart: (1) To penetrate the retail market in virtually every location in the United States, and (2) to grow over time in terms of number of