2. nature and scope of management accounting

Question 1

what is accounting? (3)

Answer 1

• the language of business
• developed from a capitalist thinking
• to record business transactions

Question 2

types of services around accounting (8)

Answer 2

➢ audit
➢ assurance
➢ taxation
➢ management consulting
➢ valuation
➢ market research
➢ actuarial
➢ corporate finance

Question 3

management accounting v financial accounting

Answer 3

see sticky note (slide 6)

Question 4

responsibilities of management accounting

Answer 4

• 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 5

definition of management accounting

Answer 5

• 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 6

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> -
> -
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Answer 6

• planning
  > formulate plans for different activities and
  > coordinate these plans into budgets
• controlling
  > management accountants produce performance reports that compare actual outcomes with planned goals
• organising
  > management accountants develop accounting reporting systems that are closely related to organisational structure
• communicating
  > Management Accountants can aid the communication function by installing and
  maintaining an effective communication and reporting system (e.g. the budget and
  performance reporting process)
• motivating
  > The budgets and performance reports produced by Management Accountants have an
  important influence on the motivation of managers and employees
• decision making
  > Providing guidance for decision making and problem-solving

Question 7

customer satisfaction and new management approaches (5)

Answer 7

1. key success factors
2. continuous improvement
3. employee empowerment
4. value chain analysis
5. social responsibility and ethics

Question 8

1. key success factors

Answer 8

• Quality: quality measures, Total Quality Management
• Cost efficiency: increased emphasis on accurate product costs and
  cost management
• Time: reduced cycle time and focus on “non-value-added” activities
• Innovation: responsiveness in meeting customer requirements
• Product comparisons
• Feedback on customer satisfaction

Question 9

2. continuous improvement

Answer 9

• Static historical standards are no longer appropriate
• Benchmarking

Question 10

3. employee empowerment

Answer 10

• Delegate more responsibility to people closest to operating processes
  and customers

Question 11

4. value chain analysis

Answer 11

• Suppliers, R&D, design, production, marketing, distribution, customer
  service
• Internal customer perspective

Question 12

5. social responsibility and corporate ethics

Answer 12

• CSR
• Sustainable development

Question 13

cost accounting

Answer 13

• provides information for both management accounting and financial accounting
• measures and reports financial & non financial data that relates to the cost of acquiring or consuming resources by an organisation
• accounting concerned with cost accumulation for inventory valuation to meet the requirements of external reporting and internal profit measurement

Question 14

cost management

Answer 14

• describes activities of managers in short run and long run planning and control of costs
• includes continuous reduction of costs
• key part of general management strategies and their implementation
• accounting concerned with the provision of information to people within the organisation to aid decision making and improve the efficiency and effectiveness of existing operations

Question 15

benchmarking

Answer 15

❑ Identify an activity that needs to be improved.
❑ Find an organisation that is the most efficient at this
activity.
❑ Study its process and utilise that process.

Question 16

target costing

Answer 16

• identify product opportunity
• determine price that would make product competitive
• determine if product can be made at cost sufficiently low to provide a desired profit

Question 17

balance scorecard

Answer 17

• seeks to link performance measures to an organisations strategy
• should be used to clarify, communicate and manage strategy

Question 18

management translates strategy into performance measures that employees understand and accept.
- performance measures
>
>
>
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Answer 18

> financial
internal business processes
customer satisfaction
innovation and learning

Question 19

challenges facing management accounting

Answer 19

• UN SDGs, ESG – challenges in reporting, integrating practices
• Sustainability challenges in general: ‘measuring’, sustainable creation
• SMEs: circular economy
• Conflicts, expectations and ambiguity of managerial positions
• Digital business strategies
• Technology innovation
• Employee Trust
• Forecasting corporate control