Accounting for Management Flashcards
What is a definition of financial accounting?
Financial accounting: recording financial transactions and summarizing them in periodic statements for external users.
What is a definition of cost accounting?
Cost accounting: recording data and producing information about the costs of products, activities and responsibility centres.
In management accounting, what is the information mainly produced for?
Internal use (managers and employees).
What is a definition of management accounting?
Management accounting: provision of information about historical and future costs of products and services, providing financial and non-financial information to managers.
In management accounting, what is the purpose of information?
To aid planning, control and decision making.
In management accounting, what are the legal requirements?
None.
In management accounting, what are the format requirements?
Management decides on the information they require and the most useful way of presenting it.
In management accounting, what is the nature of information?
Financial and non-financial.
In management accounting, what is the time period?
Historical and forward-looking.
In financial accounting, what is the information mainly produced for?
External use (shareholders, payables, lenders, banks, government).
In financial accounting, what is the purpose of information?
To record the financial performance in a period and the financial position at the end of that period.
In financial accounting, what are the legal requirements?
Limited companies must produce financial accounts.
In financial accounting, what are the format requirements?
Limited companies must produce financial accounts.
In financial accounting, what is the nature of information?
Mostly financial.
In financial accounting, what is the time period?
Mainly historical records.
What is data?
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.
What is information?
Information is data which has been processed in such a way that it is meaningful to the person who receives it (for making decisions).
What is a mission statement and what are its main elements?
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
What are the attributes of good information?
The ‘ACCURATE’ acronym:
A – Accurate
C – Complete
C – Cost-effective
U – Understandable
R – Relevant
A – Authoritative
T – Timely
E – Easy-to-use
What are the main functions of management?
The main functions of management are planning, decision making and control.
What is planning?
- First part of the decision-making process.
- Establishing objectives and formulating strategies to achieve objectives short-term (tactical) or long-term.
What is decision making?
- Considering the information provided and making an informed decision.
- Choosing between alternatives.
What is control?
- The second part of the decision-making process.
- Comparing information on actual and planned results to take control measures and amend plans.
What information is needed for planning?
- What has happened in the past.
- What might happen in the future.
