Solution Manual Managerial Accounting Cornerstone

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1 INTRODUCTION TO MANAGERIAL ACCOUNTING DISCUSSION QUESTIONS 1. Managerial accounting is the provision of accounting information for internal users in a firm. 2. The three broad objectives of managerial accounting are to provide information for planning, controlling, and decision making. 3. The users of managerial accounting information are generally managers and other employees of a firm. Managerial accounting information is typically not provided to outsiders but may be in selected cases. For example, a bank may require budgeting information for the next few years before agreeing to grant a loan. 4. A managerial accounting system typically provides both financial and nonfinancial information. For example, financial information on cost of production is tracked. Other information, such as the number of warranty returns, may also be tracked by the management information system. 5. Controlling involves comparing the expected performance with the actual performance to see what differences, if any, exist. 6. Planning occurs first. Planning requires setting objectives and identifying the means of achieving those objectives. Then, the results of the plan are compared with the plan, which is called controlling. Clearly, it is also feedback, in that any impediments or unexpected occurrences are noted. This feedback is then used to develop the plan for the next period. 7. Managerial accounting is internally focused, does not follow mandatory rules, keeps track of both financial and nonfinancial information, emphasizes the future, and relies on a broad range of disciplines. Financial accounting, on the other hand, is externally focused, follows externally imposed rules (such as GAAP), has a historical orientation, and provides information about the company as a whole. 8. Managerial accountants have had to broaden their focus beyond simple financial reporting to include

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