Introduction

Question 1

What is the main aim of a business?

Answer 1

To increase owners / shareholders wealth

Question 2

What is management accounting?

Answer 2

Accounting information prepared from managers -information should aid decision-making

Question 3

What are the requirements for management accounting information

Answer 3

It should develop objectives and plans
It should evaluate and control performance
It should allocate resources
It should determine costs and benefits

Question 4

What should managers do once they have established business objectives

Answer 4

They should develop strategies to achieve them

Question 5

What can management accounting do to develop and plan objectives

Answer 5

It can help identify various strategies available
It can provide information on likely outcomes of each strategy
Managers can then evaluate and select the most appropriate

Question 6

What can management accounting do in terms of evaluating and controlling performance

Answer 6

Information can be produced to compare actual performance with planned performance

Question 7

In terms of performance evaluation and control what can management accounting do if plans differ

Answer 7

Further investigation can be carried out

Question 8

Is business resources are scarce or limited what must managers do

Answer 8

Managers must use them efficiently

Question 9

If there is limited production capacity i.e. which products should be produced what needs to be considered

Answer 9

Costs selling prices machinery required make or buy et cetera

Question 10

If there is limited capital to invest in the business what needs to be considered

Answer 10

Outflows versus inflows, timescales etc

Question 11

If we are determining costs and benefits what must we do

Answer 11

We must weigh up costs against benefits to make a decision

Question 12

Can management accounting information give details of costs and benefits

Answer 12

Yes

Question 13

How does financial and management accounting compare in terms of the nature of the reports produced

Answer 13

Management accounting tend to be specific purpose and financial accounting tends to be a general purpose

Question 14

How does financial and management accounting compare in terms of the level of detail

Answer 14

Management accounting Is often very detailed and financial accounting tends to be broad overview

Question 15

Are management accounting or financial accounting regulated

Answer 15

Management accounting is unregulated and financial accounting is usually subject to accounting regulation

Question 16

What is the reporting interval for management accounting and financial accounting

Answer 16

Management accounting is as short as required by managers financial accounting is usually annual or Banja

Question 17

What time is management accounting and financial accounting based on

Answer 17

Management accounting is often based on projected future informational as well as past information financial accounting is almost always historical

Question 18

What is the range and quality of information between management accounting and financial accounting

Answer 18

Management accounting can’t keep financial and non-financial information and often uses information that cannot be verified
Financial accounting focuses on financial information with great emphasis on objective, verifiable evidence