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Chapter 1 Introduction to Cost Accounting

Learning Objectives (1 of 2). Describe the relationships among financial, management, and cost accountingIdentify two common organizational strategiesDescribe the value chain and the major value chain functions. Learning Objectives (2 of 2). Explain why accountants must understand the organizati

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Chapter 1 Introduction to Cost Accounting

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    1. Chapter 1 Introduction to Cost Accounting

    2. Learning Objectives (1 of 2) Describe the relationships among financial, management, and cost accounting Identify two common organizational strategies Describe the value chain and the major value chain functions

    3. Learning Objectives (2 of 2) Explain why accountants must understand the organization’s structure in order to perform effectively Identify the sources of ethical standards for cost accountants

    4. Two Types of Accounting Financial Meet external information needs Comply with GAAP Management Meet internal information needs Does not have to comply with GAAP

    5. Accounting Differences Financial External focus Whole organization Historical Quantitative Monetary Verifiable GAAP Formal recordkeeping

    8. Product Cost Information External parties - stockholders, creditors, regulators For investment and credit decisions Complies with GAAP Enterprise-wide focus

    11. Cost Management Goals Reduce costs Improve customer satisfaction

    15. Strategy Questions Who are your five most important competitors? Is your firm more or less profitable than these firms? Compare prices for equivalent products/services. Explain the difference. Is it customers, costs, or profit requirements? What is your competitive advantage?

    17. Value Chain Set of value-adding functions and processes that convert inputs into products/services Research and Development Product Design Supply Production Marketing Distribution Customer Service

    20. Ethics and Legislation Sarbanes-Oxley Act – CEOs and CFOs personally accountable for the accuracy of their organization’s financial reporting Foreign Corrupt Practices Act – prohibits bribes to obtain/retain business

    21. Ethics & Management Accountants Standards of Ethical Conduct for Management Accountants Competence Confidentiality Integrity Objectivity

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