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Introduction to Accounting 311

• Student information sheets

• Syllabus

• Chapter 1 in text

• Words of wisdom for life & business

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My Office Fees*

Answers: 5 cents

Solutions: 25 cents

Advice: Priceless

* Effective 1/1/2009

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Advice

• Four things you need for business success:– 1) Hard work– 2) Network of relationships– 3) A little luck– 4) Reasonable intelligence

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Cell Phones

• Turn cell phones OFF before class

• 1st offense = $1

• 2d offense = $5

• You cannot afford a 3d offense.

• During tests = $20/offense

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Accounting

Is hard to do/understand without proper training/knowledge.

takes extensive exposure/practice to learn.

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Accounting Areas (“Specialties”)

• Financial• Audit• Managerial• Tax• AIS• Not-for-profit, GovernmentalAll are interrelated. However, managerial is most important.

Financial gets your foot in the door; managerial is needed in order to advance to the top of an organization!

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Cost versus Managerial Accounting

• The same?

• Managerial Accounting:– Product/service costing– Planning & Control– Decision making

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Financial versus ManagerialAccounting

What is the difference between the two?

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Strategic Cost Management

Developing strategy

Building resources and capabilities

Implementing strategy

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Planning and Controlling

Management Decision Management Accounting System

Planning

Control

PerformanceEvaluation

Budgets

AccountingSystem

PerformanceReports

Fee

db

ack

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Planning and Controlling

What is planning?

Settinggoals

Predictingresults

Deciding howto attain goals

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Planning and Controlling

What is control?

Decidingand

takingactions

Deciding onperformanceevaluation

and feedback

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Planning and Controlling

What are budgets?

They arequantitativeexpressions

of a proposedplan of action.

They aid in thecoordination

andimplementation

of the plan.

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Planning and Controlling

What are performance reports?

These are reports thatcompare actual results

with budgeted amounts.

A single report that contains both financial and nonfinancial measures of performance is called a Balanced Scorecard.

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Performance Report Example

Budget Actual VarianceRevenues $59,000 $60,000 $1,000 FCost of goods sold 42,000 43,400 1,400 UWages 6,700 7,000 300 UGeneral 1,300 900 400 FFixed costs 5,000 5,000 0 Operating income $ 4,000 $ 3,700 $ 300 U

Boone Shop, July 2008

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Key Themes in ManagementDecision Making

Customer Focus

Value Chainand

Supply ChainAnalysis

Key Success Factors:Cost and Efficiency,

Time, Quality,Innovation

ContinuousImprovement

andBenchmarking

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Value Chain

The term “value chain” refers to the sequence ofbusiness functions in which usefulness is addedto the products or services of an organization.

The term “value” is used because as the usefulnessof the product or service is increased, so is its value

to the customer.

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Typical Value Chain

R & D Design Production

Marketing Distribution Service

Management Accounting

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3-Key Management Accounting Guidelines

1. Cost-benefit approach

2. Full recognition of behavioral as well as technical considerations

3. Using different costs for different purposes

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Professional Ethics (very important to Management Accountants)

Confidentiality

Integrity

Objectivity

Competence

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Ethical Guidelines

The Institute of Management Accountants (IMA)is the largest association of management

accountants in the United States.

The IMA has issued a Standards of EthicalConduct for Management Accountants.

See Exh. 1-7 in text

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Four- vs. Five-year Program

CMA versus the CPA

Page 843-4 in text gives a very brief outline of the CMA exam.

IMA web site = http://www.imanet.org