Chapter 1 The Accountant's Vital Role in Decision Making Review Questions and Answers 1) Describe management accounting and financial accounting. Answer: Management accounting provides information to internal decision makers of the business such as top executives, managers, sales representatives, and production supervisors. Its purpose is to help managers predict and evaluate future results. Reports are generated often and usually broken down into smaller reporting divisions such as department or product line. There are no rules to be complied with since these reports are for internal use only. Management accounting embraces more extensively such topics as the development and implementation of strategies and policies, budgeting, special studies and forecasts, influence on employee behaviour, and nonfinancial as well as financial information. Financial accounting, by contrast, provides information to external decision makers such as investors and creditors. Its purpose is to present a fair picture of the financial condition of the company. Reports are generated quarterly or annually and report on the company as a whole. The financial statements must comply with IFRS/ASPE. A CPA audits, or verifies, that the IFRS/ASPE are being followed. 2) List and briefly describe each function in the value chain. Answer: RESEARCH AND DEVELOPMENTthe generation of, and experimentation with, ideas related to new products, services, or processes. DESIGN OF PRODUCTS, SERVICES, AND PROCESSESthe detailed planning and engineering of products, services, or processes. PRODUCTIONthe coordination and assembly of resources to produce a product or deliver a service. MARKETINGthe manner by which individuals or groups (a) learn about and value the attributes of products or services and (b) purchase those products or services. DISTRIBUTIONthe mechanism by which products or services are delivered to the customer. CUSTOMER SERVICEthe support activities provided to customers.