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MANAGEMENT ACCOUNTING > Accounting for Management > Flashcards

Accounting for Management Flashcards

1
Q

What is a definition of financial accounting?

A

Financial accounting: recording financial transactions and summarizing them in periodic statements for external users.

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2
Q

What is a definition of cost accounting?

A

Cost accounting: recording data and producing information about the costs of products, activities and responsibility centres.

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3
Q

In management accounting, what is the information mainly produced for?

A

Internal use (managers and employees).

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3
Q

What is a definition of management accounting?

A

Management accounting: provision of information about historical and future costs of products and services, providing financial and non-financial information to managers.

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4
Q

In management accounting, what is the purpose of information?

A

To aid planning, control and decision making.

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5
Q

In management accounting, what are the legal requirements?

A

None.

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6
Q

In management accounting, what are the format requirements?

A

Management decides on the information they require and the most useful way of presenting it.

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7
Q

In management accounting, what is the nature of information?

A

Financial and non-financial.

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8
Q

In management accounting, what is the time period?

A

Historical and forward-looking.

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9
Q

In financial accounting, what is the information mainly produced for?

A

External use (shareholders, payables, lenders, banks, government).

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10
Q

In financial accounting, what is the purpose of information?

A

To record the financial performance in a period and the financial position at the end of that period.

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11
Q

In financial accounting, what are the legal requirements?

A

Limited companies must produce financial accounts.

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12
Q

In financial accounting, what are the format requirements?

A

Limited companies must produce financial accounts.

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13
Q

In financial accounting, what is the nature of information?

A

Mostly financial.

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14
Q

In financial accounting, what is the time period?

A

Mainly historical records.

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15
Q

What is data?

A

Data consists of numbers, letters, symbols, raw facts, events and transactions which have been recorded but not yet processed into a form suitable for use.

16
Q

What is information?

A

Information is data which has been processed in such a way that it is meaningful to the person who receives it (for making decisions).

17
Q

What is a mission statement and what are its main elements?

A

The mission statement is a statement in writing that describes the overall aim of an organization. The four main elements are:
* Purpose
* Strategy
* Policies and culture
* Values

18
Q

What are the attributes of good information?

A

The ‘ACCURATE’ acronym:
A – Accurate
C – Complete
C – Cost-effective
U – Understandable
R – Relevant
A – Authoritative
T – Timely
E – Easy-to-use

19
Q

What are the main functions of management?

A

The main functions of management are planning, decision making and control.

20
Q

What is planning?

A
  • First part of the decision-making process.
  • Establishing objectives and formulating strategies to achieve objectives short-term (tactical) or long-term.
21
Q

What is decision making?

A
  • Considering the information provided and making an informed decision.
  • Choosing between alternatives.
22
Q

What is control?

A
  • The second part of the decision-making process.
  • Comparing information on actual and planned results to take control measures and amend plans.
23
Q

What information is needed for planning?

A
  • What has happened in the past.
  • What might happen in the future.
24
Q

What information is needed for decision making?

A
  • Reliable information on different courses of action.
  • The consequences of different options.
25
Q

What information is needed for control?

A
  • Information on actual results.
  • Plans or targets.
  • Internally produced feedback.
26
Q

What are the three levels of planning?

A
  • Strategic
  • Tactical
  • Operational
27
Q

Describe strategic planning and control.

A

It is about long-term objectives and goals. It involves senior manegers.

28
Q

Describe tactical planning and control.

A

It is about short-term plans for the next year. It involves senior managers.

29
Q

Describe operational planning and control.

A

It is about day-to-day plans. It involves all managers.

30
Q

What information system is used for strategic planning and control?

A

Executive information system (EIS).

31
Q

What information system is used for tactical planning and control?

A

Decision support system (DSS).

32
Q

What information system is used for operational planning and control?

A

Transaction processing system (TPS).

MANAGEMENT ACCOUNTING (3 decks)

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