Chapter 1 COPY

Question 1

What are DIFFERENCES between MANAGEMENT ACCOUNTING (MA) and FINANCIAL ACCOUNTING (FA)?

Answer 1

1/ USERS OF INFORMATION

+ MA: Internal: managers and employees at all levels. + FA: External: Shareholders, creditor, banks, stock exchange, trade unions and government agencies.

2/ REGULATIONS

+ MA: a/ NO accounting standards or external rules are imposed. b/ Information is generated to SATISFY managers’ information needs.

+ FA: Accounting standards and corporations law regulate the content of external financial reports. 3/ SOURCE OF DATA + MA: Both financial and non-financial data drawn FROM MANY SOURCES: market, customer and economic date, etc. + FA: ONLY FROM the organisation’s core transaction-based accounting system. 4/ NATURE OF INFORMATION + MA: Past, subjective, timely, current and future-oriented,…to suit managers’ specific needs. + FA: Past, reliable, verifiable, not timely, not always releven and highly aggregated.

Question 2

CH1 Who are SENIOR ACCOUNTANTS?

Answer 2

• Financial controller,
• Chief accountant,
• Finance manager,
• General manager (GM) of accounting,
• Group accountant.

Question 3

CH1 WHERE do ACCOUNTING STAFF work in a business or corporation?

Answer 3

Accounting staff may be found in OPERATING DIVISIONS as well as CORPORATE LEVEL.

Question 4

CH1 Are management accounting ACTIVITIES only undertook by Accounting staff?

Answer 4

No. Managers from OTHER FUNCTIONAL AREAS may also UNDERTAKE management accounting activities.

Question 5

CH1 What are the roles of management accounting PROCESSES and TECHNIQUES?

Answer 5

• Support the organisation’s FORMULATION and IMPLEMENTION of strategy.
• Improving the organisation’s COMPETITIVE ADVANTAGE through process improvement and cost management techniques.
• PROVIDE INFORMATION to help MANAGE RESOURCES through systems of planning and control
• Provide ESTIMATES of the COSTS of an organisation’s outputs, to SUPPORT the strategic and operational decision needs of managers.

Question 6

CH1 What is VISION?

Answer 6

– The desired future state or ASPIRATION of an organisation.

– Used by SENOR MANAGERS to focus the ATTENTION and energies of STAFF.

Question 7

CH1 What is MISSION STATEMENT?

Answer 7

DEFINES the PURPOSES and BOUNDARIES of the organisation.

Question 8

CH1 What are OBJECTIVES (GOALS) of management accounting and strategy?

Answer 8

Objectives (or goals)

– SPECIFIC STATEMENT of what the organisation aims to ACHIEVE.

– Often QUANTIFIED

– Relates to a SPECIFIC PERIROD of time.

Question 9

CH1 What are STRATEGIES of management accounting and strategy?

Answer 9

Strategies

– The DIRECTION that the organisation intends to TAKE OVER the long term to MEET its mission and ACHIEVE its objectives.

– FOCUS on ways to manage the organisation’s resources to CREATE VALUE for customers and shareholders.

Question 10

CH1 What is Competitive advantage?

Answer 10

• Advantages that a business may have over another that are DIFFICULT to imitate, achieved through.
• Cost leadership - Product differentiation

Question 11

What is the key purpose of management accounting systems?

Answer 11

It is to MOTIVATE managers and employees to direct their efforts towards ACHIEVING the organisation’s goals (Budgeting systems, performance measurement and reward systems may be used as motivational tools)