Intro to management accounting

Question 1

Management accounting

Answer 1

Provides information for managers of an organisation who direct and control its operations.

The process of identifying, measuring, accumulating, analysing, preparing, interpreting and communicating information used by management to plan, evaluate and control within an entity and to ensure appropriate use of accountability for its resources.

Question 2

Financial accounting

Answer 2

Provides information to shareholders etc who are outside of an organisation.

Question 3

Role of management accounting

Answer 3

Developing plans and analysing alternatives.

Communicating plans to key personnel.

Evaluating performance.

Reporting results of activities.

Accumulating, maintaining and processing an organisations financial and non financial information.

Question 4

Characteristics of useful info

Answer 4

Relevance
Understandability
Timeliness
Comparability
Reliability
Completeness

Question 5

Purpose of info

Answer 5

Aimed at achieving organisational objectives

but

objectives may be poorly defined
may be objectives in conflict
objectives could change over time

Question 6

Cost/benefit criterion

Answer 6

Cost of obtaining info should not outweigh the benefit of possessing it.

Question 7

Similarities between management and financial accounting

Answer 7

Both predominantly quantitative
Share certain data resources
Both key elements of the MIS

Question 8

Expanding role of managerial accounting

Answer 8

Factors -
Regulatory environment
Increasing complexity and size of organisation
World wide competition
Increased emphasis on quality
Rapid development and implementation of technology

Question 9

Changing business environment

Answer 9

More competitive environment emphasising - 
Global competition
Low prices and costs
Higher quality products
Meeting and anticipating customer needs

New tools for managers -
Total quality management
Process reengineering
Theory of constraints

Question 10

Current issues for management accounting

Answer 10

Changing organisation forms - flatter, network structures.

increased important of service industries and changing approaches to public sector management.

Question 11

Code of ethics for management accountants

Answer 11

Integrity -
Refrain from activities that could discredit the profession.
Refuse gifts of favours that might influence behaviour.
Communication unfavourable as well as favourable info.
Avoid activities that could affect ability to perform duties.

Question 12

Differences between financial and management accounting - users

Answer 12

Financial accounting -
External persons who make financial decisions.

Management accounting -
Managers who plan for and control an organisation.

Question 13

Differences between financial and management accounting - time focus

Answer 13

Financial accounting -
Historical perspective

Management accounting -
Future emphasis

Question 14

Differences between financial and management accounting - emphasis

Answer 14

Financial accounting -
On verifiability and precision

Management accounting -
On relevance for planning and control

Question 15

Differences between financial and management accounting - frequency

Answer 15

Financial accounting -
Regular basis

Management accounting -
ad hoc basis - for particular purpose as necessary

Question 16

Differences between financial and management accounting - focus

Answer 16

Financial accounting -
Primary focus is on whole organisation

Management accounting -
Focuses on segments of an organisation

Question 17

Differences between financial and management accounting - format

Answer 17

Financial accounting -
Must follow GAAP and prescribed formats

Management accounting -
Flexible - based on users need

Question 18

GAAP

Answer 18

Generally accepted accounting principles