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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Communication

Todd Johnson is the vice president of Finance for Boz Zeppelin Industries, Inc. At a recent finance meeting, Todd made the following statement: “The managers of a company should use the same information as the shareholders of the firm. Wien managers use the same information to guide their internal operations as shareholders use in evaluating their investments, the managers will be aligned with the stockholders’ profit objectives.”

Prepare a one-hall page memo to Todd discussing any concerns you might have with his statement.

To determine

To prepare: A memorandum, and discuss whether there is any concern with his statements.

Explanation

Prepare a memo to Person T for the discussion of any concern with his statements.

Memo

From,

ABC

To,

Person T

Re:  Financial Vs managerial accounting information.

Dear Sir,

The financial accounting and managerial accounting objectives are quite different. Hence your statement does not consider these objectives. In one sense, at high levels in the organization your statement may be appropriate. For example: it is appropriate to evaluate division manager of a company using the same financial information measures that the shareholders of the company use to evaluate. But evaluating managerial decision making cannot be appropriate below the division level. In the financial performance, the relevant information needed to direct and control the operations of the company cannot be measured at this level. In the operational performance measures, it need to focus on costs like measuring cost, equipment availability, scrap, quality delivery time, inventory levels, waste, and efficiency...

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