1 Accounting

Question 1

What is Accounting?

Answer 1

Accounting is concerned with collecting, analysing and communicating financial information.
“The process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information.”

Question 2

What is the purposes of accounting?

Answer 2

1. Formulating organisational strategies and long-range plans
2. Resource allocation decisions- e.g. product and customer emphasis and pricing
3. Cost planning and cost control of operations and activities
4. Performance measurement and evaluation of people
5. Meeting external regulatory and legal reporting requirements

Question 3

What is the management accountant responsible for?

Answer 3

• Determining the relevant information.
• Collecting the information
• Communicating the information
• Incentives to achieve objectives
• Monitoring achievement of objectives and highlighting any cause for concern.

Question 4

What is financial accounting?

Answer 4

The field of accounting that deals with the preparation of financial statements that are to be used by users external to an organisation.

• is concerned with the ways in which funds for a business are raised and used.
• seeks to optimise the risk and return combinations from projects in order to enhance the value of the organisation

Question 5

What is the objective of financial statements?

Answer 5

to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decision.

Question 6

What does management accounting encompass?

Answer 6

techniques and processes that are intended to provide financial and non-financial information to people within an organisation to make better decisions and thereby achieve organisational control and enhance organisational effectiveness

Question 7

What is the role of management accountants?

Answer 7

• help to formulate plans for different activities and co-ordinate these plans into budgets for the business as a whole
• produce performance reports that compare actual outcomes with planned outcomes
• develop accounting reporting systems that are closely related to organisational structure to ensure organisational goals are followed by departments.
• aid the communication function by installing and maintaining an effective communication and reporting system (e.g. the budget and performance reporting process)

Question 8

What is finance?

Answer 8

the acquisition and subsequent management of funds to support the achievement of business objectives