chapter 1 accounting

the two areas of accounting are
Financial and managerial
management ______ look at financial work
does not
financial accounting provides work for
investors and stock holders, outsiders
managerial accounting provides work for
insiders, for management
Institute of management accountants
4 sections of IMA
The Primary Users of Reports in Financial Accounting are
External users: stockholders, creditors, and regulators
Types and Frequency of reports in Financial Accounting are
Financial statements, Quarterly and annually
Purpose of Reports in Financial Accounting
General Purpose
Content of Reports for Financial Accounting
Pertains to business a whole. Highly aggregated (condensed). Limited to double-entry accounting and cost data. Generally accepted principles
Verification process of Financial Accounting
Audited by CPA
Primary Users or Reports for Managerial Accounting
Internal Users: Officers and managers
Types and frequency of reports Managerial
Internal Reports. As frequent as needed
Purpose of reports managerial
special- purpose for specific decisions
content of reports managerial
pertains to subunits of the business. very detailed. Extends beyond double entry accouting to any relevant data.
Verification Process Managerial
no independent audit
IMA did what?
published and promoted the following standards of ethical conduct for management accountants
Commitment to ethical standards include
overarching principles that express our values, and standards that guide our conduct
IMA’s overarching ethical principles include:
honesty, fairness, objectivity, and responsibility.
members failure to comply results in disciplinary action
I am prepared to do the work of a managerial accountant and maintain
four categories of Competence are
1) maintain appropriate level of professional expertise by continually developing knowledge and skills
2) perform professional duties in accordance with relevant laws, regulations, and technical standards
3) Provide decision support information and recommendations that are accurate, clear, concise, and timely
4) Recognize and communicate professional limitations or other constraints that would prelude responsible judgemnet or successful performance of an annuity
only need to know basis
three categories of confidentiality
1) keep information confidential excpt when disclosure is authorized or legally required
2) inform all relevant parties regarding appropriate use of confidential information
3) Refrain from using confidential information for unethical or illegal advantage
nothing to embarrass the company or profession
three categories of integrity
1) miligate actual conflicts of interest
2) refrain from engaging in any unethical
3)don’t discredit
furnish all information in a timely manner full diclosure
three categories of credibilty
1) communicate
2) disclosure relevance
3) disclose delays or internal controls
consist ofactivities and processes that convert raw materials into finished goods
direct material
raw materials that can be physically and directly associated with the finished product during the manufacturing process
Indirect materials
not essentially associated with finish product
Direct labor
the work of factory employees that can be physically and directly associated with converting raw materials into finished goods
indirect labor
refers to the work of employees whose activities with no physical association with product.
Product/Manufacturing cost
Direct Material, Direct labor, overhead
period cost
everything else
product cost
cost that are necessary and integral part of producing the finished product
period cost definition in textbook
costs that are matched with the revenue of a specific time period rather than included as part of the cost of a salable
cost of goods sold
adding beginning finished goods inventory to cost of goods manufactured and subtract finished goods
Cost og good sold formula
Beg. Finished goods+ Cost of Goods Manufactured- Ending Finished Goods
Total manufacturing cost formula
sum of DM, DL, overhead
total cost of work in progress
sum of beg. wip and total man. cost
Cost of goods man.
total cost of wip subtract ending wip
cost of goods man schedule
reports cost element used in calculating CGM