Chapter 1 Flashcards
6 reasons why Business environment more competitive
customers more sophisticated
global economy transcends borders
rapid change in technology
deregulation of domestic markets
increasing shareholder pressure for returns
increased volatility of financial markets
Strategic Managment Process
Establish Mission, Vision, Objectives Position Analysis Identify and assess strategic options Select strategy, formulate plans Perform, Review and Control
Biggest Chances to business landscape (7)
- Growth of Service Sector
- Emergence of New industries
- Eccomerse growth
- Automated Manufacturing
- Lean Manufacturing
- Greater Product Innovation
- Fster response times
Quality of Managerial Accounting depends on 2 main things:
- Relevance
2. Faithful Representation (Reliability)
Other qualities of Managerial Accounting that helps:
Materiality (useful info, not omittable) Comparability Verifiability Timeliness Understandability
Why is efficient accounting system crucial?
Can have big consequences if not: TUI wrote off 117 mil due to two seperate systems not integrated
4 areas MAD helps clients
Developing objectives and plans (budgets)
performance evaluation and control (variance, benchmarking)
Resource allocation
Determining costs and benefits
Managerial Accountants are in a good place to explain what?
the relationship between financial and non-financial results if they collect non-financial KPIs
Problems of Managerial Accounting
Mainly focus on measured variables, narrow focus
Manipulation possible, especially if linked to salary
focus on short term goals, rather than long term
Can have negative behaviour issues - under pressure to perform unethically
Nature of MA Reports?
purpose specific
Level of detail?
considerable
Regulations?
Internal use only, so flexible in design
Forward or backward looking?
Both
