Introduction To Management Accounting

Question 1

What is management accounting

Answer 1

Management accounting is concerned with the provision of information for use within an organisation,

Question 2

What are the two functions of management accounting

Answer 2

1. Decision making by managers 2. Planning and control of business activities

Question 3

What are the three overlapping areas of accounting activity

Answer 3

1. Financial management 2. Management accounting 3. Financial reporting

Question 4

What are the 3 primary functions of cost/management accounting

Answer 4

1. Inventory valuation for internal and external profit measurement 2. Provide relevant information to help managers make better decisions 3. Provide information for planning, control and performance measurement

Question 5

What is inventory valuation

Answer 5

The allocation of costs between products sold and fully and partly completed products that are unsold

Question 6

How can management accounting provide information to help managers

Answer 6

1. Profitability analysis 2. Product Pricing 3. Make or Buy (Outsource the product) 4. Product mix and discontinuation

Question 7

How can management accounting provide information for planning, control and performance measurement

Answer 7

1. Long term and short term planning (budgeting) 2. Periodic performance reports for feedback control 3. Performance reports used to evaluate the performance of managers

Question 8

What are the financial statements you will be preparing in Foundations of Financial Accounting

Answer 8

1. Statement of Financial Position 2. Statement of Comprehensive Income 3. Statement of changes in equity 4. Statement of Cash flow

Question 9

Differences between Financial Accounting and Management Accounting (Table)

Answer 9

Question 10

Who are the users of Accounting Information (10)

Answer 10

1. Owners
2. Customers
3. Competitors
4. Employees & Representatives
5. Government
6. Community
7. Investment Analysts
8. Suppliers
9. Lenders
10. Managers

Question 11

What are the 6 stages in the decision-making, planning and control process

Answer 11

1. Identify Objectives
2. Search for alternative courses of action
3. Search appropriate courses of action
4. Implement the decisions
5. Compare actual and planned outcomes
6. Respond to divergences from the plan

Question 12

Why do Operational managers need management accounting information

Answer 12

To make decisions regarding the control and improvement of operations

Question 13

Why do Middle managers need management accounting information

Answer 13

To supervise, plan, and make decisions about financial and physical resources, products, services and customers

Question 14

Why do senior managers need management accounting information

Answer 14

To support strategic decisions that have long-term consequences for the organisation