EXERCISES

1. Define management.
- Management is the group of people in a business who have overall
responsibility, for operating the business and for achieving the
company’s goals

2. What are the three functions of management? Explain each.

1. Planning - managers establish organizational goals and create a course of
action to achieve them
2. Directing - is to distribute the resources and delegate tasks to personnel to
achieve the goals established in the planning stage
3. Controlling - is the process of evaluating the execution of the plan and
adjusting to ensure that the organizational goal is achieved.

Source: https://www.indeed.com/career-advice/career-development/basic-functions-of-
management#:~:text=The%20four%20basic%20functions%20of%20management%20are
%20planning%2C%20organizing%2C%20leading,builds%20on%20the%20previous
%20function.

3. What is decision making?

- It is not a separate management function. Rather, it is the outcome of the
exercise of good judgment in planning, directing, and controlling.

4. Explain what an organizational chart is.

- It is a diagram that shows the structure of an organization and the
relationships and relative ranks of its parts and positions/jobs. It is also
called organigram or organogram.

5. Who are the board of directors of a corporation?

- It is an elected group of individuals that represent shareholders.

6. What is the function of a chief executive officer (CEO)?

- CEO has overall responsibility for managing the business. The CEO
delegates responsibility to other officers so that each member of the
organization has a clearly defined role to play.
7. What is the function of the chief financial officer (CFO)?
- CFO is responsible for all the accounting and finance issues of the
company.

8. What are the duties of a controller? Treasurer?

- CONTROLLER
 Planning, controlling, designing, installing, and maintaining the cost
 accounting system.
 Predicting future costs
 Coordinating the development of the budget
 Accumulating and analyzing actual costs
 Preparing and analyzing performance reports
 Preparing reports for external users
 Providing information for special decisions
 Consulting with management as to cost information
 Internal auditing
 Tax administration
 Protection of assets
 Economic appraisal

- TREASURER
 Financial planning or fund management
 Obtaining funds to finance the acquisition of fixed assets
 Evaluating the acquisition of fixed assets
 Short – term finance sourcing or managing working capital needed
 Banking and custody
 Managing the pension fund
 Managing foreign exchange transactions
 Credits and collection
 Distribution of corporate earning to owners

9. Why is accounting called “a tool of management”?

- It is called a tool of management because it provides for the orderly
accumulation, reporting and interpretation of data pertaining to the
financial operations of the business.
 10. What are the distinguishing characteristics of financial and managerial
accounting?

FINANCIAL MANAGERIAL
BASIS ACCOUNTING ACCOUNTING
Primary users of  External users:  Internal users:
Reports stockholders, creditors officers and managers
and regulators

Types of frequency  Financial statements  Internal reports

Of Reports  Quarterly and annually  As frequently as
needed

Purpose of Reports  General – purpose  Special–purpose for

specific decisions

Sources of Data  Basic accounting system  Basic accounting

of the business and other system of the
sources from external business
information

Content of Reports  Pertains to business as a  Pertains to subunits of

whole the business
 Highly aggregated  Very detailed
(condensed)  Extends beyond
 Limited to double–entry double–entry
accounting and cost data accounting to any
 Generally accepted relevant data
accounting principles  Standard is relevance
to decisions

Verification Process  Audit by CPA  No independent audits