Chapter 1

Question 1

CH1 What is MANAGEMENT ACCOUNTING?

Answer 1

The PROCESSES and TECHNIQUES for mangers to USE organisational recourses EFFECTIVELY and EFFICIENTLY

—> enhance customer and shareholder VLUE. (The PROCESSES & TECHNIQUES supporting managers to USE organisational recourses EFFECTIVELY and EFFICIENTLY in order to enhance customer and shareholder VALUE).

Question 2

CH1 What does management accounting INCLUDE?

Answer 2

1/ Customer value: The VALUE that a customer places on particular features of a PRODUCT or SERVICE.

2/ Shareholder value The VALUE that shareholders or owners place on a BUSINESS.

3/ Resources Financial and non-financial, including information, work processes, employees, committed customers and suppliers. Determine the CAPABILITIES and COMPETENCES of the organisation.

Question 3

CH1 What is management accounting systems?

Answer 3

Systems that PRODUCE THE INFORMATION required by managers to CREATE value and manage resources.

Question 4

What does INFORMATION of mangement accounting systems INCLUDE?

Answer 4

1/ ESTIMATES of the COSTS of producing goods and services.

2/ Information for PLANNING and CONTROLLING operations.

3/ Information for MEASURING performance. 4/ Ad-hoc information may also be supplied to satisfy managers’ short-term and long-term decisionmaking needs.

Question 5

CH1 What does management accounting information FUCUS?

Answer 5

Focus is on the NEEDS of managers within the organisation.

Question 6

CH1 What is the ATTRIBUTE of management accounting information?

Answer 6

FEXIBILITY in the TYPES of information provided.

Question 7

CH1 What is management accounting information INFLUENCED by?

Answer 7

– Managers’ INFORMATION NEEDS, nature of the resources they manage.

– DIFFERENCES in production and service technologies, organisational structure, organisational size, the external environment, level of sophistication of computer systems.

Question 8

CH1 WHO is management accounting information by?

Answer 8

Used by SENIOR MANAGERS through to OPERATIONAL MANAGERS.

Question 9

CH1 What is FINANCIAL ACCOUNTING?

Answer 9

The practice of PREPARING and REPORTING accounting information for PARTIES OUTSIDE the organisation.

Question 10

CH1 What is COSTING SYSTEMS?

Answer 10

• A system that ESTIMATES the costs of GOODS and SERVICES as well as the cost of ORGANISATIONAL UNITS, such as departments.
• Costing systems are COMMON to both FINANCIAL and MANAGEMENT ACCOUNTING.