Introduction to Management Information Flashcards
CHAPTER 2
Data definition
A ‘scientific’ term for facts, figures & measurements
Information definition
Data that has been processed in such a way to be meaningful to the person who receives it / Processed data
Anything that is communicated
Is an individual questionnaire a data??
No - It is just a review from one customer, it needs to be processed to be meaningful/produce reports
Management
Term used for the people in charge for running a business (managers)
Management information
Information given to people in charge of running an organisation
Two types of management information
○ Financial
○ Non-financial
Purpose of management information
○ Planning
○ Control
○ Decision making
Planning
Plan resources a business will require and how will be used
Control
Control over business activity - make sure stick to original plan
Decision making
Involves a choice between alternatives - reach an informed decision
3 groups that need to co-operate in reporting information
1) End users - management & supervisors
2) Accounts department - process the information
3) Information technology department - set up & make changes to computer system
Example of management information reports
○ Comparison budgeted &actual
○ Year-to-date
○ Comparison company result & competitor result
○ Comparison current & previous year
○ Product/organisation profitability
○ Value of closing inventories
Internal information
Capturing data/information from inside the organisation
☺System for collecting data
☺ Informal communication - staff ⇄ manager
☺ Communication between staff
Internal data sources
- Receivable ledger
- Payable ledger
- Cash books
- Information about personnel
- Staff
External information
Capturing information from outside the organisation
Routine task / Informal non-routine
Routine task
☺ Tac specialist gather information about changes in tax law
☺ New legislation on health & safety at work
☺ New employement regulations
☺ Research & development
☺ Market research exercises
Informal non-routine
Goes on all the time - consciously & unconsciously
☺ Newspaper
☺ Websites
☺ TV reports
☺ Publications
External data sources
From :
- customer
- supplier
- government
- libraries
- information bureaux (biro)
- internet
- consultancies
Charts of account
Coding structure
Cost accounting
Accumulation of costs for inventory valuation
- meet both the requirements of external report & internal profit measurement
- for both financial & management accounting
Characteristics of management accounting
- Distributed internally within a business
- No legal requirement
- Look at past AND future data
- Include both financial AND non financial information
- Help in control, decision making, planning
- Scope : Each department
- Frequency : As required
- Figure : As accurate as possible
** makes a lot of estimations - to plan and make decisions
Characteristics of financial accounting
- Provide accurate financial information
- For EXTERNAL reporting
- A legal requirements with IFRS/GAAP rules
- Look at PAST data only
- Include financial information only
- Scope : Whole organisation
- Frequency : Annually
Role of trainee accountant
Provide answers to questions on costs & revenue
Possible questions for trainee accountant
> Cost of goods produced?
Cost of operating a department?
How profitable certain products?
Review the cost of products
Put value to inventories
Produce regular performance statements
