Generally Accepted Accounting Principles

Submitted By carly-chiarelli
Words: 539
Pages: 3

Chapter 1
Generally Accepted Accounting Principles (GAAP)- managerial does NOT follow.
Financial Accounting
External focus
Must follow external rules
Objective financial information
Historical orientation
Information about a firm as a whole
More self contained
Managerial Accounting
Internally focused
No mandatory rules
Financial and nonfinancial information, subjectivity is a possibility.
Emphasis on the future
Broad/ multidisciplinary
Decisions based on detailed information
Managerial Accounting’s 3 Broad Objectives:
1. Provide information for planning the organization’s actions.
2. Provide information for controlling the organization’s actions.
3. To provide information for making effective decisions.
3 Parts to being a Manager
1. Planning
The detailed formulation of action to achieve a particular end.
2. Controlling
The activity of monitoring a plan’s implementation and taking corrective action as needed.
3. Decision Making
Choosing between competitive alternatives.
Activity Based Costing (ABC)
A more detailed approach to determining the costs of goods, and services.
Paid a purchase price of less than the perceived purchase price.
Strategic Positioning
Effective cost information can help the company identify strategies that can increase customer value. (cost leader) (volume based)
Differentiation (selling quality)
Differentiator Cost Leader
-apple -windows
-whole foods -dillons
Value Chain
Starting at design working its way onto a finished product.
Total Quality Management (TQM)
An attempt to oversee the quality of your product throughout production.
Time has a Key Element
Product of life cycle (introductionmature stage)
Ethical Behavior
Involves choosing actions that are right, proper, and just.
Chapter 2
What is given to get something in return.
Expired costs- when the cost has been used.
Revenue per unit. (per unit or on a whole, consider the options?)
Accumulation Costs
The way that costs are measured and recorded.
Variable Costs
Increases as the total output increases, and decreases in total as the total output decreases.
Fixed Costs
Does not increase as the output increases or decreases.

Opportunity Cost
Something that is sacrificed to get another.
Any good produced
Any service produced. Services are considered to be perishable (go away).
Both tangible, and intangible