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BUS140 - Introduction to Management Accounting > Chapter 1 Reading > Flashcards

Chapter 1 Reading Flashcards

1
Q

what does management accounting do?

A

measures, analyses and reports financial and non-financial information

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2
Q

what is the intention of management accounting?

A

to primarily assist managers in fufilling the organisation’s goals

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3
Q

what does management accounting contain?

A

accounting, finance & management

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4
Q

what do managers use to gain insights into the data they collect?

A

data analytic techniques

‘big data’

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5
Q

what does management accounting do for shareholders?

A

protects, preserves and increases value for shareholders

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6
Q

what do management accountants engage in?

A

the identification, generation, presentation, interpretation and use of relevant information serve numerous purposes

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7
Q

what questions do management accountants ask themselves?

A

how will this information help managers do their job better?

do the benefits of producing this information outweigh the costs?

does the information recognise what is specific about the organisational context?

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8
Q

what are the broad differences between MA & FA?

A

regulations
range & detail of information
reporting interval
time period

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9
Q

regulations for MA = ?

A

MA isn’t externally regulated

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10
Q

range & detail of information for MA = ?

A

MA reports include financial and non-financial information

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11
Q

reporting interval for MA = ?

A

MA reports may be produced as frequently as they’d like

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12
Q

time period for MA = ?

A

MA can include, past, present, and future information

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13
Q

purpose of info for MA & FA = ?

A

MA helps managers make decisions to fulfil the organisation’s goals

FA communicates financial info to external users (investors, banks, regulators)

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14
Q

primary users for MA & FA = ?

A

MA - managers
FA - external users (e.g., investors, banks, regulators, suppliers etc.)

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15
Q

what is the focus & emphasis of MA & FA?

A

MA is future oriented (projections, budgets for the future)

FA is past oriented (analysing a past period)

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16
Q

rules of measurement & reporting = ?

A

for MA, internal measures & reports mustn’t follow relevant accounting standards

for FA, statements must be prepared and certified by external, independent auditors

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17
Q

time span & type of reports = ?

A

MA reports can vary, being daily or every decade

FA reports are typically annually or quarterly

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18
Q

behavioural implications of FA & MA = ?

A

MA’s designed to influence managerial behaviour

FA also influences managerial behaviour as management’s remuneration correlates with financial performance

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19
Q

cost accounting = ?

A

measures & reports financial & non-financial information related to the organisation’s acquisition or use of resources

provides information for MA & FA

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20
Q

a central task of managers is…?

A

cost management

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21
Q

cost management = ?

A

actions by managers undertaken to satisfy customers while continuously reducing & controlling costs

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22
Q

are MA and cost accounting interchangeable?

A

yes

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23
Q

is cost management solely about reducing costs?

A

no

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24
Q

what are the two strategies companies can use to grow their profits?

A

cost leadership - providing quality goods for low prices

product differentiation strategy - providing unique products for a premium

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25
Q

what information does MA provide to help formulate strategies?

A

info about company costs, efficiency & productivity relative to competitors or prices a company can charge

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26
Q

bargaining power of customers = ?

A

when customers can demand lower prices

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27
Q

bargaining power of suppliers = ?

A

how expensive inventory are to companies

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28
Q

what questions do companies typically ask management accountants regarding pricing and strategy?

A

bargaining power of customers/suppliers?

are there substitutes to our products/services in the marketplace?

will adequate cash be available to fund the strategy?

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29
Q

what are the purposes of the accounting system in an organisation?

A
  • formulating overall strategies & plans
  • resource allocation decisions
  • cost planning & cost control
  • performance measurement & evaluation of people
  • meeting external regulatory requirements
30
Q

formulating overall strategies & plans = ?

A

new product development & investment plans, seeking customer, market & supplier information

31
Q

resource allocation decisions = ?

A

involves reports on profitability/ROI

32
Q

cost planning & cost control = ?

A

involves reports on revenues, costs, assets, liabilities etc.

33
Q

performance measurement & evaluation of people = ?

A

includes comparisons of actual results with planned results

34
Q

meeting external regulatory & legal reporting requirements = ?

A

reports must adhere to authoritatively determined guidelines

35
Q

influences on changes in accounting information = ?

A
  • increased change in business world
  • shorter product life cycles
  • digital transformation of companies
  • increased uncertainty
  • increased focus on customer satisfaction
  • more complex business transactions
  • the rise of intellectual capital
36
Q

planning = ?

A

choosing goals, predicting results under various ways of achieving those goals and then deciding how to attain the desired goals

37
Q

budget = ?

A

a quantitative expression of a plan of action and an aid to the coordination and implementation of the plan

38
Q

control = ?

A

covers both the action that implements the planning decision and the performance evaluation of the personnel and operations

39
Q

management by exception = ?

A

the practice of concentrating on areas that aren’t operating as expected and placing less attention on areas operating as expected

40
Q

variance = ?

A

the difference between an actual result and the budgeted amounts

41
Q

what do well conceived plans include?

A

flexibility, so managers can seize unforeseen opportunities

42
Q

feedback = ?

A

involves managers examining past performance and systematically exploring alternative ways to improve future performance

43
Q

uses of feedback = ?

A
  • tracking growth (sales, revenue, profit margins etc)
  • searching for alternative means of operating
  • changing methods for making decisions
  • making predictions
  • changing operations
  • changing the reward system
44
Q

scorekeeping = ?

A

function that involves accumulating data and reporting reliable results to all levels of management

e.g., recording of sales, purchase of materials, payroll payments

45
Q

attention directing = ?

A

function that involves making visible both opportunities and problems on which managers need to focus

e.g., highlighting rapidly growing markets

46
Q

problem solving = ?

A

function that involves comparative analysis to identify the best alternatives in relation to the organisation’s goals

47
Q

what are the three management accountant’s functions?

A

scorekeeping
attention-directing
problem-solving

48
Q

what’s the purpose of the cost-benefit-context approach?

A

provides a solid point for analysing how, why, and with what effects accounting is used in a business

49
Q

key themes of planning & control = ?

A
  • customer focus
  • value-chain & supply-chain analysis
  • continuous improvement benchmarking
50
Q

value chain = ?

A

the sequence of business functions in which utility/usefulness is added to the products/services of an organisation

51
Q

supply chain = ?

A

describes how the flow of goods, services & information

52
Q

what is the value chain flow?

A

R&D
product design
production
marketing
distribution
customer service

53
Q

R&D = ?

A

the generation of & experimentation with ideas relating to new products

54
Q

product design = ?

A

detailed planning & engineering of products

55
Q

production = ?

A

the coordination & assembly of resources to produce/deliver a product/service

56
Q

marketing = ?

A

the manner by which people learn about the value of the product/service

57
Q

distribution = ?

A

the mechanism by which products are delivered to customers

58
Q

customer service = ?

A

the support activities provided to customers

59
Q

key success factors = ?

A

factors that directly affect customer satisfaction

cost, quality, timeliness, innovative products, sustainability

60
Q

why is sustainability important?

A

it’s important to investors & other external stakeholders as part of ethics

61
Q

digitalisation = ?

A

the process whereby use of digital technologies changes the business model & provides new revenue & value producing possiblities

62
Q

blockchain = ?

A

an accounting technology described as a ‘distributed ledger’ which records transactions continuously

63
Q

big data & analytics = ?

A

make possible the provision of insights drawn from large amounts of data

64
Q

the cloud = ?

A

refers to services where information & files are kept on servers connected to the internet

65
Q

MA is used to provide…

A

future-oriented information to help managers make decisions & pursue an organisation’s goals

66
Q

FA is used to…

A

develop reports for external users on past financial performance

67
Q

accounting system’s 5 broad purposes = ?

A

formulating overall strategies
resource allocation decisions
cost planning & cost control
performance measurement
meeting external regulatory obligations

68
Q

accounting influences…

A

planning, control & decision making through budgets & other financial benchmarks

69
Q

management accountants perform which 3 functions?

A

scorekeeping
problem-solving
attention-directing

70
Q

how do companies add value?

A

through R&D, design, production, distribution, marketing, customer service

71
Q

fundamental ethical principles = ?

A

integrity
confidentiality
professional behaviour
professional competence & due care
objectivity

BUS140 - Introduction to Management Accounting (15 decks)

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