Accounting techniques

Question 1

What are managerial accounting techniques?

Answer 1

The process of identifying, measuring, analysing and interpreting accounting information to help managers make decisions and manage the company operations

Question 2

What are some examples of managerial accounting techniques?

Answer 2

Cost benefit analysis

Rate of return

Question 3

What is a cost benefit analysis as a managerial accounting technique?

Answer 3

Process used to measure benefits of a decision / action minus costs associated with taking that action

Involves measurable financial metrics such as revenue earned / costs saved as a result of the action

Can include intangible benefits and costs from a decision such as employee morale and customer satisfaction

Question 4

What is a rate of return analysis as a managerial accounting technique?

Answer 4

Gain or loss on an investment over a period of time expressed as a percentage

Can be used when considering multiple projects as it provides the expected rate of return from each project

However, it does not differentiate between investments that yield different cash flows over the lifetime of the project