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Chapter 1 Managerial Accounting

Business Process

A series of steps that are followed to carry out some task in a business.

Chief Financial Officer (CFO)

The member of the top management team who is responsible for providing timely and relevant data to support planning and control activities and for preparing financial statements for external users.


Anything that prevents an organization or individual from getting more of what it wants.


The member of the top management team who is responsible for providing relevant and timely data to managers and for preparing financial statements for external users. Reports to the CFO.

Corporate governance

The system by which a company is directed and controlled. If properly implemented it should provide incentives for top management to pursue objects that are in the interests of the company and it should effectively monitor performance.

Corporate social responsibility

A concept whereby organizations consider the needs of all stakeholders when making decisions. It extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations.


The delegation of decision- making authority throughout an organization by providing managers with the authority to make decisions relating to their area of responsibility.

Enterprise risk management

A process used by a company to help identify the risks that it faces and to develop responses to those risks that enable the company to be reasonably assured of meeting its goals.

Finished Goods

Units of product that have been completed but have not yet been sold to customers.

Just-in-time (JIT)

A productions and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand.

Lean thinking model

A five step management approach that that organizes resources around the flow of business process and that pulls units through these processes in response to customer orders.


A position in an organization that is directly related to the achievement of the organizations basic objectives.

Non-value-added activities

Activities that consume resources but do not add value for which customers are willing to pay.

Organization Chart

A diagram of a company's organizational structure that depicts formal lines of reporting, communication, and responsibility between managers.

Raw materials

Materials that are used to make a product.

Sarbanes-Oxley act of 2002

Legislation enacted to protect the interests of stockholders who invest in publicly traded companies by improving the reliability and accuracy of the disclosures provided to them.

Six Sigma

A method that relies on customer feed back and objective data gathering and analysis techniques to drive process improvement.


A position in an organization that is only indirectly related to the achievement of the organization that is only indirectly related to the achievement of the organizations basic objectives. Such positions provide service or assistance to line positions or to other staff positions.


A "game plan" that enables a company to attract customers by distinguishing itself from competitors.

Supply Chain management

A management approach that coordinates business processes across companies to better serve end consumers.

Theory of Constraints (TOC)

A management approach that emphasizes the importance of managing constraints.

Value Chain

The major business functions that add value to a company's products and services such as research and development, product design, manufacturing, marketing, distribution, and customer service.

Work in process

Units of product that are only partially complete and will require further work before they are ready to sale to a customer.

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