Managerial Accounting: Tools for Business Decision-Making 6th Canadian Edition by Jerry J. Weygandt
Generally, vice presidents of sales and production are focused mostly on their own areas and activities; the controller is the one person who has information available on both areas. The controller can work with these two people and help determine the information that they will need to meet their goals. Without effective information, it is unlikely that the company’s implementation of a balanced scorecard will offer expected results.
COMPLETION STATEMENTS
106. Financial accounting information is prepared mainly for ___ users while managerial accounting information is prepared primarily for ___ users.
107. The types of reports prepared in managerial accounting are often ___-purpose reports prepared for a specific decision.
108. Managerial accounting reports generally pertain to ___ of an entity and may be very detailed.
109. Three broad managerial functions are: (1) ___, (2) ___ and ___, and (3) ___.
110. The ___ function is concerned with setting goals and objectives for the entity.
111. Exercising good judgment in performing the managerial functions and choosing among alternative courses of action is called ___.
ANSWERS TO COMPLETION STATEMENTS
106. external, internal
107. special
108. subunits
109. planning, directing and motivating, controlling
110. planning
111. decision making
MATCHING
112. A list of managerial accounting terms appears below:
a) theory of constraints
b) activity-based costing
c) just-in-time inventory
d) balanced scorecard
e) value chain
f) enterprise resource planning (ERP)
Instructions
Match each of the terms with the statement that best describes the term.
1. ___ A system that provides a comprehensive, centralized, integrated source of information used to manage all major business processes.
2. ___ The group of activities associated with providing a product or service.
3. ___ An approach used to reduce the cost associated with handling and holding inventory by reducing the amount of inventory on hand.
4. ___ A method used to allocate overhead to products based on each product’s use of the activities that cause the incurrence of the overhead cost.
5. ___ An approach used to identify those factors that limit a company’s productive capacity and to address those limitations so as to maximize profitability.
6. ___ A performance-measurement technique that attempts to consider and evaluate all aspects of performance using financial and non-financial measures in an integrated fashion.
ANSWER TO MATCHING
1. f
2. e
3. c
4. b
5. a
6. d
SHORT-ANSWER ESSAY QUESTIONS
SAE 113
Both financial and managerial accounting are concerned with the economic events of an enterprise. Similarities between financial and managerial accounting do exist, but they do have different focuses. Briefly distinguish between financial and managerial accounting as they relate to (1) the primary users, (2) the type and frequency of reports, (3) the purpose of reports, and (4) the content of reports.
Solution 113
Financial accounting is primarily concerned with external users such as stockholders and creditors, while the primary users of managerial accounting are those within the company (internal users) such as officers, managers, supervisors, etc. Quarterly and annual classified financial statements are the end product of financial accounting. Internal reports, prepared as often as needed are the result of managerial accounting. The financial statements produced by financial accounting are general-purpose reports which are highly aggregated, pertain to the enterprise as a whole, and are constrained by generally accepted accounting principles. The internal reports prepared by management accountants are special-purpose reports which are detailed, pertain to subunits of the enterprise, and may contain any information relevant to the decision at hand.