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Lecture 03

Lecture 03. Overview of Lecture 02. Theory of Comparative Advantage International Business Methods Business Strategies Business Stakeholders Organizational Goals The Process of Providing Information Purpose of Information The Purpose of Accounting Accounting System Financial Statements

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Lecture 03

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  1. Lecture 03

  2. Overview of Lecture 02 • Theory of Comparative Advantage • International Business Methods • Business Strategies • Business Stakeholders • Organizational Goals • The Process of Providing Information • Purpose of Information • The Purpose of Accounting • Accounting System • Financial Statements • Managerial Accounting and Financial Accounting

  3. Managing Resources, Activities and People • Decision making • Choosing among the available alternatives • Planning • Developing a detailed financial and operational description of anticipated operations. • Directing operational activities • Running the organization on a day to day basis • Controlling • Ensuring that the organization operates in the intended manner and achieves its goals.

  4. How Managerial Accounting Adds Value to the Organization • Providing information for decision making and planning. • Assisting managers in directing and controlling activities. • Motivating managers and other employees towards organization’s goals. • Measuring performance of activities, managers, and other employees. • Assessing the organization’s competitive position.

  5. Balance Scorecard • Financial perspective • Income from operations • Working capital • Cash flow from operations • Inventory turns • Internal operations perspective • Reduction in process cycle time • Number of engineering changes • Capacity utilization • Order response time

  6. Balance Scorecard • Customer perspective • Rank in customer survey • Market share • Repeat order rate • Customer complaints • Learning and growth perspective • Leadership competence • Percentage of patent-protected turnover • Training days per employee • Quality improvement team participation

  7. Begin Comparing ActualtoPlanned Performance (Controlling) Implementing the Plans(Directing and Motivating) DecisionMaking MeasuringPerformance (Controlling) Planning and Control Cycle Formulating Long-andShort-Term Plans (Planning)

  8. Line and Staff Positions • Aline position is directly involved in achieving the basic objectives of an organization. • Example:A production supervisor in a manufacturing plant. • A staff position supports and assists line positions. • Example: A cost accountant in the manufacturing plant.

  9. Controller The chief managerial and financial accountant responsibility for: • Supervising accounting personnel • Preparation of information and reports, managerial and financial • Analysis of accounting information • Planning and decision making

  10. Treasurer Responsible for raising capital and safeguarding the organization’s assets. • Supervises relationships with financial institutions. • Work with investors and potentialinvestors. • Manages investments. • Establishes credit policies. • Manages insurance coverage

  11. Internal Auditor Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. • Expresses an opinion to topmanagement regarding theeffectiveness of theorganizations accountingsystem.

  12. Location of Managerial Accountant • Organizational chart • Line and Staff Position • Line position include chairman, president directly responsible for operations regarding good or service • Staff position include CFO, VP government relations etc. • CFO or Controller • Responsible for personnel in accounting department and preparing managerial and financial reports. • Treasurer • Responsible for raising capital and safeguarding organizational assets. • Internal auditor • Responsible for reviewing accounting procedure, records and reports in both controller and treasure areas of responsibility.

  13. Location of Managerial Accountant (cont`d) • Cross Functional Deployment • Located in staff capacity • Work with top management, marketing and sales personnel, design engineers, operations managers, legal experts, quality control personnel and virtually every specialized type of employee. • Physical Location • Every where in every part of enterprise, • Headquarter to place of products and services

  14. Organizational chart Board of Directors Top management Chairman and CEO Vice chairman of Board Senior Executive Vice President and Chief of Corporate Operations Executive VP Executive VP Executive VP Executive VP Staff Position ABC Inc President Consumer products Chairman & president Engineering Vice chairman & president Chairman other country Operating Units Operating Units Operating Units Operating Units Line Position

  15. Major Themes in Managerial Accounting Behavioral Issues Costs and Benefits Information and Incentives Evolution and Adaptation Managerial Accounting

  16. Lecture 03 • Managing Resources, Activities and People • How managerial Accounting Adds value • Balance Scorecard • Planning and Control Cycle • Line and Staff Positions • Location of Managerial Accountant • Organizational chart • Major Themes in Managerial Accounting

  17. End of Lecture 03

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