Ch1: Intro to Management Accounting Flashcards
What is Management Accounting?
The process and techniques that focus on the effective use of an organisation’s resources. It’s primary concern is the control of costs.
What is the definition of Planning, in the context of Management?
The process of determining the direction of future operations for the business. What does the business hope to achieve? What do they need to do to get there?
What are the 4 main functions of the management team?
- Planning the organisation’s goals and direction
- Organising Resources
- Motivating employees
- Design control systems to ensure business operations proceed according to plan
What are primary 4 fundamental principles an accountant should comply with:
- Integrity
- Objectivity and Independence
- Confidentiality
- Professional Competence
What is an Internal Control
Systems that are set up to control internal procedures. They aim to ensure efficiency and accuracy in business operations
What are the 4 most common types of job costing systems:
- Job Costing System
- Process costing system
- Operation costing
- Activity based costing
What are the features of a Job Costing System
A system where all costs are traced or assigned to an individual job. Each job is costed separately as no two jobs are exactly the same.
What is a Process Costing System?
A system in which all production costs are traced to a process or department, then averaged across all units produced.
This is used most frequently when the items being produced a identical.
Aside from job and process costing, what are the other two types of costing systems?
- Operation Costing
- Activity Based Costing
What are the two types of internal control? Give who examples of each.
Administrative
- safeguard assets
- writing and maintaining clear procedures
Financial
- segregation of duties
- transactions must first be authorised
What are the five broad categories of internal control?
- Segregation of duties
- Proper authorisations
- Proper documents and records
- Control over access
- Independent checks
Initially management accounting was concerned with job costing in the manufacturing sector. Why has management accounting had to change?
Changing business environment has resulted in changes to how businesses operate, trade and manage. It is also leading to a new level of demand f or the skills and capabilities of professional management accountant.
Why do businesses have cost systems?
Job costing helps the businesses ensure that all costs involved in a job have been properly recorded. The businesses use costing systems to control costs and track costs of appropriately to the price of individual identifiable products, orders or job lots
