Intro to Managerial Accounting 145

accountant

A person who maintains the financial records of a business. Accountants are carefully trained experts in finance, and are certified by a variety of organizations.

actual cost

The measured cost of a completed task or product.

bill of materials

A managerial accounting report that shows what goes into making a particular product, and the costs of each individual component.

Chief Financial Officer

Also known as the CFO. A member of the highest level of management responsible for all financial data relating to a company. Will usually be in charge of several other accountants who handle both managerial and financial accounting.

competence

The ability to use knowledge as a managerial accountant to perform the tasks required.

confidentiality

Assurance that financial information will be shared only with those who need to know it and otherwise kept private.

conflicts of interest

Any relationships that are or appear to be against the best interest of the organization, and may cloud the perceived integrity of a managerial accountant.

control

Monitoring a process to assure that it is functioning according to plan and advancing the goals of the company as a whole by providing relevant feedback.

controller

An accountant put in charge of a division or section of a company who reports all information to the chief financial officer.

creditor

Any person or organization that loans money to be repaid at a later date.

cumulative costs

The total expenditure on a task or product.

direct labor

The wages of employees who actually manufacture a specific product. Direct labor is a direct cost and includes only those employees who are directly making the product.

effective date

The date on which a particular report was performed.

ethics

Professional standards of morally right and wrong actions.

feedback

Reports that help a manager to monitor the progress of a project.

financial accounting

The area of accounting concerned with reporting financial information to external parties. Financial accounting is bound by the rules of GAAP.

Financial Accounting Standards Board

A private organization that establishes standards for financial accounting and monitors compliance with these standards.

finished goods

Units that have been completed and are ready for sale.

Generally Accepted Accounting Principles

GAAP. Accounting rules and procedures adopted by the accounting profession to facilitate uniformity in preparing financial statements.

incremental costs

The predicted cost of how much should be spent per unit once production begins.

indirect labor

The wages of a worker who does not directly contribute to manufacturing a product, but who is still needed to run the factory.

Institute of Management Accountants

A professional organization that advocates for the role of managerial accounting in modern corporations. The IMA also certifies managerial accountants.

integrity

The idea that a managerial accountant will avoid conflicts of interest and unethical actions.

item engineering costing report

A report that shows the various costs that go into the engineering of a specific product, and provides data on how much the potential manufacturing of a product will cost.

job detail report

A report that attempts to summarize all of the available information on a given job.

job-order costing

A costing system used for companies that produce many different types of products in a given period of time.

level

A measure of whether a component is created from other components or is used as purchased.

level 1

A component that is used as purchased.

level 2

A component that is made of other components and must be assembled first before being used in a larger assembly.

managerial accountant

An accountant who specializes in providing companies with internal financial reporting tailored to their needs.

managerial accounting

The area of accounting concerned with reporting financial data internally to be used for business decisions as well as monitoring completion of goals. This type of accounting is customizable and not bound by GAAP rules.

manufacturing order variance report

A report that shows the production costs based on what has already been completed, and projects how those costs will affect the final cost of the order as a whole.

net operating income

The available income from operations after subtracting costs and expenses of those operations.

objectivity

The idea that a managerial accountant will communicate openly and clearly with anyone in the corporation without bias.

performance report

A report that compares the plan for a project to the actual data from that project.

predicted cost

The forecasted cost of a task or product based on past costs and records. Managers will use predicted costs as a tool to help decide on a project or plan.

process costing

A costing system used for companies that produce one identical product in large quantities.

raw materials

The materials that are used to make the final product.

schedule of cost of goods manufactured

An analysis of the cost of a particular company for a particular time period.

Securities and Exchanges Commission

A federal organization set up to protect investors and maintain fair and efficient markets.

Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management

The ethical code of behavior developed by the Institute of Managerial Accountants to govern the actions of managerial accountants and insure that ethics are a priority for all accountants.

stockholder

An owner of a corporation based on owning interests (or stocks) in the corporation rather than specific property.

unit

A single finished product.

variance

The difference between the actual cost of a project and the predicted cost.

work-in-progress

Units that are in the process of being made but are not finished