财务会计英文版课后习题答案Ch15.docx

1、财务会计英文版课后习题答案Ch15CHAPTER 15DISCUSSION QUESTIONS1. Donaldson Brown developed the idea of using the return on investment (ROI) formula to evaluate the financial performance of the different divisions of a company. This idea was revolutionary because it came to be widely used by management in discoveri

2、ng and analyzing problems across large and diverse organizations. It continues to be heavily used today as a valuable management tool in any industry.2. Management accounting provides many tools that enable managers to accurately analyze and evaluate company performance. These tools enable managers

3、to pinpoint problems. Once managers identify problems, they can plan and implement strategies to fix the problems and gain a competitive advantage. Also, an understanding of the various cost concepts allows managers to make correct costing and pricing decisions, which can result in a great competiti

4、ve advantage.3. Management accounting information can help companies to be competitive and profitable because it helps managers understand product costs and other costs and how changes in volume, prices, and other factors will affect profitability. With more accurate information, management knows wh

5、ere to cut costs, where productivity should be increased, and so forth.4. Managers (internal decision makers) use different types of accounting information than do investors or creditors (outside decision makers) partly because they make different types of decisions. More importantly, management acc

6、ounting provides much more detailed and proprietary information to company managers compared to the information provided by financial accounting to outside investors and creditors. Many examples can be used to illustrate the differences between financial and management accounting. Two major differen

7、cestime focus and segmentsare discussed in detail here. Managers will spend a lot of effort projecting the profitability of potential decisions on sales by assessing the impact of variable and fixed costs (such as advertising expenditures). On the other hand, an investor doesnt have access to variab

8、le and fixed cost data and so will analyze the sales trend in prior years income statements (past time focus) to evaluate the companys growth potential. A manager would need to know the projected sales of a particular product (segment) to decide how many units to purchase or produce, while an invest

9、or would be interested in total sales (whole organization) to compare the company to others in the industry.5. We would disagree with the statement for two reasons. First, managers realize that outside investors and creditors make investment and lending decisions based in part upon these financial s

10、tatements. If the organization needs to raise capital, its financial performance (as measured by these statements) must be favorable. Second, external financial statements are also signals for management action. If profits are falling or debt is becoming too high as a percentage of total equity, man

11、agement must decide on a course of action to improve future performance (as measured by these financial statements).6. External users of financial statements need assurance that the statements were prepared using consistent measurements. The adherence to generally accepted accounting principles (GAA

12、P) in the preparation of the statements helps to assure the user that this years statements are prepared on a basis consistent with that of last years. Also, following GAAP helps the user to judge whether one companys performance is comparable with another companys. Internal users are less concerned

13、 about comparing their companys performance with that of other companies. As a practical matter, sufficiently detailed operating information on other companies is generally not available to facilitate the comparisons management might like to make. Further, since managers can request internal informa

14、tion following a customized format, they are obviously less concerned that report formats are consistent across different decisions. For example, a manager could request that the inventory of each segment be revalued at current replacement cost. Such an internal report would be labeled with the appr

15、opriate assumptions, and the manager would know that the measurement had been adapted in order to be relevant to the needs of a particular decision.7. Planning is defined as outlining the activities that need to be performed for an organization to achieve its objectives. Planning consists of recogni

16、zing needs and/or opportunities, identifying and evaluating the alternatives, and implementing decisions. Controlling is defined as monitoring the execution of plans. Controlling consists of establishing expectations, creating performance measures, gathering results, and computing variances. Evaluating consists of analyzing the results of a project, providing feedback to those who participated in the project, and rewarding performance. After evaluating projects