Accounting for management Flashcards
DATA
Raw material for data processing. Relating to facts, events, transactions.
INFORMATION
- Data that has been processed.
- Has to be meaningful to the person who receives it.
- Anything that is communicated.
QUALITIES OF GOOD INFORMATION
- Relevant (to the purpose management wants to use it for)
- Complete (have all the information to do the job properly)
- Accurate (accurate enough for its purpose)
- Clear (clear to the user)
- Aspire confidence (trusted by the managers)
- Appropriately communicated
- Manageable volume (clear and concise)
- Timely (info after decision making is only for controlling and comparing)
- Costs of acquiring, storing information should not exceed its benefits
TYPES OF INFORMATION
- Financial (costs, revenue)
- Non-financial (number of meals served)
- Combined (average costs of meal served)
WHY DO WE USE INFORMATION?
- Planning ( establishing objectives, selecting appropriate strategies)
- Controlling
- Decision making
OBJECTIVE
Aim or goal of the organisation.
STRATEGY
Possible course of action that might enable an organisation to achieve its objectives.
AIM OF PROFIT / NON - PROFIT ORG.
- Profit - Maximise profits + increase outputs of goods/services
- Non-profit - Provide service/goods + minimize costs
STRUCTURE FOLLOWS STRATEGY and vice versa
STRUCTURE FOLLOWS STRATEGY - developing structure to implement a strategy
STRATEGY FOLLOWS STRUCTURE - structure limits strategy options
LONG-TERM STRATEGIC PLANNING = CORPORATE PLANNING
- Selecting strategies to prepare a LT plan to attain objectives
- Depending on organisation, industry, environment
- Ending with corporate plan
SHORT-TERM TACTICAL PLANNING
- Operational purposes
- One-year plan
- Focusing on sections, functions, departments
CONTROL PROCESS STAGES
- Performance - operational plans vs. actual performance comparison on regular basis
- Corporate plan - reviewed in the light of comparisons made and changes in parameters on which the plan was based
ANTHONY`S VIEW OF MANAGEMENT ACTIVITY
- STRATEGIC PLANNING - set or change objectives or strategic targets
- TACTICAL / MANAGEMENT CONTROL - decisions about efficient and effective use of an organisation`s resources
- OPERATIONAL CONTROL - specific tasks are carried out effectively and efficiently
MANAGEMENT CONTROL SYSTEM
- Measuring and correcting the performance
- Making sure that objectives of organisation are being met
ANTHONY`s TYPES OF INFORMATION
- STRATEGIC
- senior management
- LT
- ad hoc basis
- quali- and quantitative
- wohle organisation - TACTICAL
- middle management
- short and medium term
- departments
- quantitative - OPERATIONAL
- front line managers
- highly detailed
- immediate term
- task-specific
- quantitative
FINANCIAL ACCOUTING SYSTEMS
- Assets and liabilities of a business are properly accounted for
- Providing info for shareholders and interested parties
MANAGEMENT ACCOUNTING SYSTEM
- Provide information for managers and internal use
MANAGEMENT VS. FINANCIAL ACCOUNTIN
- Detail the past performance / plan, control, decision-making
- Internal / external
- Legal requirements
- Format
- Business as whole / specific areas
- Monetary / non-monetary measures
- Historic / Historic + future
COST ACCOUNTING
- Part of management accounting
- Gathering cost information and its attachment to cost objects
- Standard costs, budgets, actual costs
- Variances, profitability
1. Cost of goods, department
2. Revenues
3. Profitability
4. Selling prices
5. Values of goods/inventories
6. Future costs
7. Actual costs vs. budgeted costs
8. What information management needs
MANAGEMENT ACCOUNTING
- Application of the principles of accounting and financial management
- To create, preserve and increase value to shareholders
COST ACCOUNTING INFORMATION
- Unsuitable for decision making
- It does not take uncertainity into account
- If you do not account for uncertainity, you can never be risk-free
