Cost Accounting-Chapter 1 Essay
1. Flexibility is said to be the hallmark of modern management accounting, whereas standardization and consistency describe financial accounting. Explain why the focus of those two accounting systems differs. Financial accounting is more about the bigger picture—it evaluates the finances of the organization as a whole, using historical, quantitative, monetary, and factual data. It is more formal and requires the use of GAAP. The information financial accounting provides is more suitable for external users such as investors, creditors, and the SEC. Meanwhile, the information obtained from managerial accounting is more for internal users such as managers and employees. This type of accounting is focused on …show more content…
Issues of corruption are much more common in Venezuela than the U.S. and this can affect the company’s business. Since Venezuela is not one of the countries that signed the Anti-Bribery Convention, the company has no assurance that the business or even the government practices over in Venezuela would be fair and honest. Having to deal with corruption on the business as well as the political levels on top of the cultural differences may be too much for the U.S. company to handle if it opened a business there.
Exercise 1-23: You are the manager of a small restaurant in your hometown.
a. What information would you obtain for making the decision of whether to add quiche and rack of lamb to your menu?
I would look at how much it costs to make the quiche and the lamb, whether I have the core competency for making those foods, and the demographics of my hometown.
b. Why would each of the information items in (a) be significant?
I need to know whether or not I would be able to make profits from selling the quiche and lamb if the costs of making them are higher or lower than the potential income from selling them. If I can afford to buy the ingredients, it would not matter at all if I do not have a chef that is skilled in making the quiche or lamb. Selling subpar quiche or lamb would