chapter 1 Flashcards
Define Management accounting
Management accounting measures, analyses and reports financial information and non-financial information that are intended primarily to assist managers in fulfilling the goals of the organisation.
what do managers use to gain insights on data and what is the most common application?
Many managers now use data analytic techniques to gain insights into the data they collect. This is popularly referred to as ‘big data’ and is associated with machine learning and artificial intelligence. The most common application of machine learning and artificial intelligence is in making predictions.
What is the reason why professional management accountants apply the principles of accounting and financial management ?
to create, protect, preserve and increase value for the shareholder of for-profit and not-for-profit enterprises in the public and private sectors. They might engage in the identification, generation, presentation, interpretation
list the relevant informational that management accountants use
- develop, communicate and implement strategies
-plan long-, medium- and short-term operations
-determine capital structure and fund that structure
-coordinate design, operations and marketing decisions and evaluate performance
-control operations and ensure the efficient use of resources
-measure and report financial and non-financial information to stakeholders
-implement corporate governance procedures, risk management and internal controls
-explore the potential for managerial and organisational value creation.
what authority does Financial Reporting Council (FRC) have
has the authority to issue accounting standards. The FRC’s regulator views its objective to ‘regulate auditors, accountants and actuaries.
Generally difference between Management and Financial accounting (Regulation )
Management accounting reports are generally prepared for internal use and no external regulations govern their preparation. Conversely, financial accounting reports are generally required to be prepared according to accounting regulations and guidelines imposed by law and the accounting profession.
Generally difference between Management and Financial accounting (Range and detail of information)
Management accounting reports may encompass financial, non-financial and qualitative information which may be very detailed or highly aggregated. Financial accounting is usually broad-based, lacking detail and intended to provide an overview of the position and performance of an organisation over a time period. It tends to focus on financial information.
Generally difference between Management and Financial accounting (Reporting interval)
Management accounting reports may be produced frequently on an hourly, daily or weekly basis, possibly to span several years. The interval covered by management accounting information will be dictated by the decision-making and control needs of the information users.
financial accounting reports are produced annually. Some large companies also produce semi-annual and quarterly reports
Generally difference between Management and Financial accounting (Time period)
Management accounting reports may include historical and current information, but also often provide information on expected future performance and activities. Financial accounting reports provide information on the performance and position of an organisation for the past period. They tend to be backward-looking
What is common between Management and financial accounting
that reports such as balance sheets, income statements and statements of cash flows are common to both management accounting and financial accounting.
Define cost accounting
measures and reports financial and non-financial information related to the organisation’s acquisition or use of resources. It provides information for both management accounting and financial accounting.
For example, calculating the cost of a product is a cost accounting function that meets both the financial accountant’s stock-valuation needs and the management accountant’s decision-making needs (such as deciding how to price products and choosing which products to promote).
what is cost management and give one component
To describe the actions managers undertake in the short-run and long-run planning and control of costs that increase value for customers and lower the costs of products and services and is a key part of general management strategies
An important component of cost management is the recognition that prior management decisions often commit the organisation to the subsequent incurrence of costs.(bringing on cost) and It typically includes the continuous reduction of costs and encompasses the whole life cycle of the product from product conception to deletion
What does cost management include
making decisions to incur additional costs with the goal of enhancing revenues and profits. Whether or not to enter new markets, implement new organisational processes, and change product designs are also cost management decisions.
Are accounting systems cost management ?
no
information from accounting systems helps managers to manage costs, but the information and the accounting systems themselves are not cost management.
What does strategy described as ?
A company’s strategy specifies how the organisation matches its own capabilities with the opportunities in the marketplace. In other words, strategy describes how an organisation creates value for its customers while distinguishing itself from its competitors
