1 Flashcards
What are the learning objectives of the first lecture?
- Explain the role of management accounting system and its limitations
- Explain the importance and limitations of using profits as a performance measure
- Explain factors that may invalidate conventional management accounting practices.
What does MAS stand for?
Management Accounting System.
According to Abdel-Kader and Luther (2008), MAS provides crucial information for decision-making within an organization.
What is the formula for profit calculation?
Revenues – Costs = profits for owners/shareholders.
True or False: Profit is a forward-looking measure.
False.
Profit is considered a backward-looking measure as it is calculated after the fact.
List the limitations of profit as mentioned in the content.
- Backward-looking measure
- Emphasizes short-term goals
- Ignores risk
- Subject to manipulation
- Ignores cost of capital.
What is one alternative to using profit for decision-making?
Market value of the company.
Market value reflects the future potential of the company and is less likely to be manipulated.
What crisis in management accounting is highlighted?
Labour cost used to allocate overheads decreased while overheads increased, leading to irrelevant management accounting techniques.
This situation allows waste and variance analysis may encourage overproduction.
What are some new MAS techniques developed in response to the crisis?
- Balanced scorecard
- Activity-based costing
- Target costing
- Supply chain accounting
- Life cycle costing
- Lean accounting.
Fill in the blank: ‘Cash is fact, profit is ______.’
opinion.
What is the significance of the Balanced Scorecard?
It is one of the new MAS techniques developed to overcome limitations of conventional accounting.
The Balanced Scorecard helps to provide a more comprehensive view of organizational performance.
What does the acronym COSO stand for in the context of risk management?
Committee of Sponsoring Organizations of the Treadway Commission.
What is the submission deadline for the group assignment?
14th May 2025, 12pm noon.
What is one implication of using different costing systems?
The profit value may change due to changes in methods rather than actual increases in sales or customer satisfaction.
What is the role of a management accounting system?
To provide information for better decision-making, control, planning, inventory valuation, and waste reduction.
