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CIMA - BA2 > 1. Introduction to Management Accounting > Flashcards

1. Introduction to Management Accounting Flashcards

1
Q

What is management accounting?

A

The practical science of value creation within organisations in both the private and public sectors

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2
Q

Where is management accounting information used, what for, and by who?

A

Within the organisation, for decision making, confidential to those with a direct need for it

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3
Q

What is management accounting information the basis of?

A

Informed business decisions

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4
Q

What is costing?

A

Identifying how much cost is involved in the making of a physical product or the provision of a service

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5
Q

What is planning and control?

A

Looking forward and producing budgets and forecasts based on company objectives, then monitoring and taking action on performance against these budgets/forecasts

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6
Q

What decision making are management accountants involved in?

A

Pricing, product profitability and resource requirements

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7
Q

What is the CIMA definition of management accounting?

A

Establishing viable strategies and converting them into profit or into value for money.

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8
Q

According to the CIMA definition, what activities do management accountants carry out? (9)

A
  1. Formulation of policy and objectives
  2. Formulation of strategic plans
  3. Formulation of short term plans
  4. Acquisition and use of finance
  5. Design of information systems and recording of transactions
  6. Generation, communication and interpretation of financial information
  7. Provision of specific information for decision making
  8. Monitoring of outcomes against plans and benchmarks
  9. Improvement of business systems and processes through risk management and internal audit review
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9
Q

What is the IFAC definition of a professional? (3)

A
  1. Having skills, knowledge and expertise tested by examination and continuously developed
  2. Committed to the values of Honesty, Objectivity, Accuracy, Reliability, Transparency and Integrity.
  3. Subject to oversight by a body with disciplinary powers
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10
Q

What is the IFAC definition of an accountant?

A

Belonging to a recognised accounting body and upholding professional standards and approaches in the discipline of recording, analysing, measuring, reporting, forecasting and giving advice in support of financial, management and strategic decisions.

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11
Q

What is the IFAC definition of an accountant within business? (2)

A
  1. Working in an organisational entity of any size and ownership structure, or alone, whether or not operating for profit, other than for external audit
  2. An integral member of, or support to, the management team striving to create and sustain value for stakeholders
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12
Q

What are the 6 main activities of a management accountant?

A
  1. Generation or creation of value through effective use of resources, understanding drivers of stakeholder value and organisational innovation
  2. Provision, analysis and interpretation of information to management for for decision making and strategy formulation
  3. Performance measurement and communication to stakeholders
  4. Cost determination and financial control through cost accounting, budgeting and forecasting
  5. Reduction of waste in resources through analysis and cost management
  6. Risk management and business assurance
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13
Q

What are the four Global Management Accounting Principles?

A
  1. Communication (influences decision making)
  2. Relevant information
  3. Analysis of impact on value
  4. Stewardship to build trust
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14
Q

What is data?

A

Raw unprocessed figures that have been collected about an activity or procedure

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15
Q

What is information?

A

Processed data that is now in a form that makes it valuable to the user

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16
Q

What are the attributes of good information?

A 
Accurate
Complete
Cost beneficial
Understandable
Relevant
Authoritative
Timely
Easy to use
17
Q

What are the 3 levels of decision making in a business?

A

Operational, Managerial and Strategic

18
Q

What are the 4 name changes that CIMA has been through?

A
  1. Institute of Cost and Works Accountants 1919
  2. Institute of Cost and Management Accountants 1972
  3. Royal Charter in 1975
  4. CIMA 1986
19
Q

What is the CIMA code of ethics based on?

A

The International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants (part of the IFAC)

20
Q

What is the focus of the CIMA code of ethics?

A

To act in the public interest

21
Q

What are the basic needs of the accounting profession, set out in the code of ethics?

A

Confidence
Professionalism
Credibility
Provide high quality services

22
Q

What are the fundamental principles of the CIMA code of ethics?

A 
Confidentiality
Integrity
Professional behaviour
Objectivity
Professional competence and due care

CIMA - BA2 (17 decks)

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