Introduction to Management Accounting II

Question 1

What are the characteristics of useful information?

Answer 1

Real Unicorns Can Read Time Correctly
- relevant
- understandable
- comparable
- reliable
- timely (give enough time to take action)
- complete

Question 2

What should information provision ultimately be aimed at?

Answer 2

Achieving organisational objectives

Question 3

What are some problems with information provision?

Answer 3

• objectives may be poorly defined (hard to measure performance)
• several objectives may contradict/conflict
• objectives could change over time

Question 4

What is the cost/benefit critertion?

Answer 4

The idea that the cost of obtaining information should not outweigh the benefit of possessing it

Question 5

Look up/draw the cost/benefit criterion curve

Answer 5

okay

Question 6

What are some of the costs of obtaining management accounting information?

Answer 6

• Salary of accounting personnel
• Cost of purchasing and operating computers
• Cost of gathering, storing and processing data
• Cost of managers’ time to read, understand and use the information

Question 7

What are some of the benefits of obtaining management accounting information?

Answer 7

• Improved decisions
• More effective planning
• Greater operational efficiency
• Better control
• Improved customer and shareholder value

Question 8

What are some factors that increase the need for management accounting information?

Answer 8

• Increasing complexity and size of organisations
• Increased emphasis on quality
• Rapid development and implementation of technology
• World-wide competition
• Regulatory environment (British standards, compliant etc)

Question 9

What are the three main forces which have caused organisations to evolve?

Answer 9

• Globalisation
• Focus on customer wants/individualisation
• Technical obsolescence (outdated)

Question 10

What are the current issues for management accounting?

Answer 10

• The three main forces that have caused organisations to evolve
• Changing organisation forms: flatter, network structures - change in structure = change in information needed
• Increased importance of service industries and changing approaches to public sector management

Question 11

What do ethical accounting practices do?

Answer 11

Build trust and promote loyal, productive relationships with users of accounting information