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Chapter 1 Management Accounting: An Overview
0. 7yste 7ystem m o!je o!jecti ctive vesC sC c, h, l %ro&le' 3 (ole (ol e o0 Mana*e'ent A##ountants/
Planning . +he management accountant gains an understanding of the impact on the organi% organi%atio ation n of planned planned transactions transactions 'i.e., 'i.e., analy%i analy%ing ng strength strengthss and wea$nes wea$nesses ses(( and econo economic mic events, events, !oth strategic and tactical, tactical, and sets o!taina!le o!taina!le goals for the organi%ation organi%ation.. +he developm development ent of of !udgets is an e"ample of planning. Controlling . +he management management accountant accountant ensures ensures the integrity integrity of financial financial information, monitors performance against !udgets and goals, and provides information information internally internally for decision decision ma$ing. ma$ing. &omparing &omparing actual performance performance against !udgeted performance and ta$ing corrective action where necessary is an e"ample of controlling. Internal auditing is another e"ample. Evaluating Performance Performance.. +he management management accountant accountant judges and and analy%es the implication of various past and e"pected events, and then chooses the optimum optimum course of action. action. +he managemen managementt accountant also translates data data and communicates communicates the the conclusions conclusions.. ;raphical analysis 'such 'such as trend, !ar charts, or regression( and reports comparing actual costs with !udgeted costs are e"amples of evaluating performance. Ensuring Accountability of Resources Resources . +he manag managem emen entt acco accoun untan tantt implemen implements ts a reporting reporting system closely closely aligned to organi%ational organi%ational goals that contri contri!ut !utee to the the measur measurem emen entt of the the effe effecti ctive ve use of resou resource rcess and safeguarding safeguarding of assets. Internal reporting such as comparison comparison of actual to !udget is is an e"ample of accounta!ility accounta!ility.. External Reporting . +he +he manag managem emen entt accounta accountant nt prepares prepares report reportss in accord accordan ance ce with with gene genera rall lly y accept accepted ed accou accounti nting ng princ princip iple less and and then then disseminates this information to shareholders, creditors, and regulatory ta" agencies. agencies. #n annual report report or a credit application application are e"amples e"amples of e"ternal e"ternal reporting. %ro&le' (Line 4ersus Sta00/
Gamie @eyes is staff. 7he is in a support role she prepares reports and helps e"plain e"plain and interpr interpret et them. Her role is to help the line line managers managers more effectively carry out their responsi!ilities. 7tephen 7antos is a line manager. He has direct responsi!ility for producing a garden garden hose. hose. &learly &learly,, one of the !asic o!jectiv o!jectives es for the e"isten e"istence ce of a 1-5