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Level 5 Management Accounting > Lecture 1 A > Flashcards

Lecture 1 A Flashcards

1
Q

What is the purpose of management accounting

A

Purpose of management accounting is focused on providing managers with the information they need to make informed decisions

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2
Q

Who is financial accounting for

A

Financial information is for external stakeholders

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3
Q

What is the purpose of financial accounting

A

Financial accountings purpose is to present an accurate picture of the company’s financial health and ensure compliance with laws and regulations

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4
Q

What’s the audience of management accounting

A

The audience for management accounting are:
- Internal stakeholders

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5
Q

What’s the audience for Financial accounting?

A

The audience for financial accounting are external stakeholders

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6
Q

Who are internal stakeholders

A

Types of internal stakeholders are:
- Managers
- Executives
- Department heads

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7
Q

Who are external stakeholders

A

External stakeholders are:
- Shareholders
- Analyst
- Banks
- Tax authorities
- Regulatory bodies

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8
Q

What type of reports does management accounting produce

A

Management accounting produces internal reports such as:
- Budgets
- Cost analysis
- Forecasts
- Performance evaluation

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9
Q

How often are management accounting reports produced

A

Management accounting reports are produced on a monthly, weekly or daily basis depending on the needs of management

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10
Q

What type of reports does Financial accounting produce

A

Financial accounting produces reports such as the:
- Balance sheet
- Income statement
- Cash flow statement

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11
Q

How often are Financial accounting reports produced

A

Financial accounting reports are produced in a quarterly or annual basis

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12
Q

Is management accounting regulated

A

Management accounting is not bound by any regulations

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13
Q

Is financial accounting regulated

A

Financial accounting is primarily regulated by the Financial reporting council

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14
Q

What is the time frame for management accounting

A

The time frame for management accounting is more future orientated and focuses on short and long term planning

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15
Q

What type of data is financial accounting based on

A

Financial accounting is based on historic data

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16
Q

What is the level of detail like in management accounting

A

Management accounting provides detailed information on specific aspects of business operations

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17
Q

What is the level of detail like for financial accounting

A

Financial accounting offers broader financial information that applies to the entire company as a whole

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18
Q

How flexible is management accounting

A

Management accounting is highly flexible and can be tailored to the needs of the organization

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19
Q

How flexible is financial accounting

A

Financial accounting is rigid and standardised

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20
Q

Why is management accounting flexible

A

Management accounting is flexible as reports can be adjusted and updated regularly based on management requirements

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21
Q

Why isn’t financial accounting flexible

A

Financial accounting isn’t flexible because financial statements must adhere to the applicable accounting frameworks and generally cannot be modified for internal purposes

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22
Q

What does the income statement show

A

The income statement shows a company’s revenues, expenses, and profits over a specific period

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23
Q

What can managers assess when analysing the income statements

A

When analysing the income statement managers can assess the profitability of the business, identify areas of cost inefficiency, and decide on strategies to boost revenue or reduce costs

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24
Q

What do budget reports outline

A

Budget reports outline expected income and expenses

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25
Q

What do budget reports help forecast

A

Budget reports help forecast future financial performance

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26
Q

What is cost analysis

A

Cost analysis is a detailed breakdown of costs associated with producing goods or providing service

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27
Q

How does the income statement assist in decision making

A

Income statements assists in decision making as it may decide to cut down on unnecessary expenses or look for more cost-effective suppliers

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28
Q

How do budget reports assist in decision making

A

Budget reports assist in decision making by comparing actual performance against budgeted figures, managers can make decisions about adjusting strategies

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29
Q

How does cost analysis assist in decision making

A

Cost analysis reports assist in decision making as if the company identifies high production costs, it may look for ways to reduce costs through process improvements

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30
Q

What does a cash flow statement show

A

Cash flow statement shows the inflow and outflow of cash over a period, helping managers understand the company’s liquidity position

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31
Q

How can cash flow statements assist in decision making

A

Cash flow statements can assist in decision making as if the company is facing cash flow shortages, management can make decisions to ensure operational continuity

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32
Q

What does return on investment(ROI) and net present value evaluate(NPV)

A

Return on investment and net present value helps evaluate the potential return on new projects or investments

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33
Q

What does calculating ROI and NPV help assess

A

Calculating ROI or NPV helps assess whether an investment will generate a positive return over time

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34
Q

How does ROI and NPV impact decision making

A

Investors or managers can use ROI and NPV to decide which projects or investments to pursue, ensuring that capital is allocated effectively to maximize returns

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35
Q

What does the balance sheet provide

A

The balance sheet provides an overview of a company’s assets, liabilities, and shareholders’ equity

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36
Q

What does the balance sheet help determine

A

The balance sheet helps determine the company’s financial health, solvency, and ability to meet long-term obligations

37
Q

How can the balance sheet influence decision making

A

The balance sheet can influence decision making as if the balance sheet indicates high levels of debt, managers may decide to take steps to reduce liabilities or restructure the company’s debt

38
Q

What can businesses determine with break even analysis

A

With break even analysis businesses can determine the level of sales necessary to cover costs and begin making a profit

39
Q

How does break even analysis influence decision making

A

Break even analysis influences decision making as it helps in setting realistic sales targets, deciding on pricing strategies, and planning the financial requirements for expansion or diversification

40
Q

What is variance allowance

A

Variance allowance is comparing actual results with planned or expected results, identifying variances

41
Q

How does variance allowance impact decision making

A

Variance allowance influences decision making because management can assess risks and take corrective actions

42
Q

How does tax planning help businesses

A

Tax planning helps businesses stay compliant with tax laws and identify tax-saving opportunities through careful planning

43
Q

How does tax planning help decision making

A

Tax planning helps decision making as managers can make decisions about the timing of strategies to optimize the company’s tax liabilities

44
Q

How do companies use Key Performance Indicators (KPI)

A

Financial and non-financial accounting data are often used to track the performance of departments, products, or employees through KPIs

45
Q

How do KPIs influence decision making

A

KPIs influence decision making as if a department falls short of KPIs management can decide to reorganize, retrain employees

46
Q

What are leverage ratios

A

Leverage ratios help assess the company’s use of debt and its ability to service debt

47
Q

How do leverage rations influence decision making

A

Leverage ratios impact decision making as high leverage may prompt decisions to reduce debt levels

48
Q

What can businesses evaluate with profitability analysis

A

With profitability analysis businesses can evaluate the profitability of different products, markets, or segments

49
Q

How does profitability analysis influence decision making

A

Profitability analysis helps influence decision making as it helps businesses decide where to focus their resources and which business opportunities to prioritize based on profitability potential

50
Q

What economic factors influence the business envroment

A

Economic factors that influence the business environment are:
- Economic conditions
- Market demand and supply
- Global economy

51
Q

What political and legal factors influence the business environment

A

Political and legal factors that influence the business environment are:
- Government policies
- Political stability
- Regulatory environment

52
Q

What technological factors influence the business environment

A

Technological factors that influence the business environment are:
- Technological advancements
- Research and Development
- Cybersecurity and Data protection

53
Q

What Social and Cultural factors can influence the business environment

A

Social and cultural factors that can influence the business environment are:
- Consumer preferences and trends
- Demographics
- Cultural values

54
Q

What Environmental factors can influence the business environment

A

Environmental factors that influence the business environment:
- Climate Change and Environmental Regulations
- Natural disasters
- Sustainability

55
Q

What Competitive factors can influence the business environment

A

Competitive factors that influence the business environment:
- Competition
- Market structure
- Strategic alliance

56
Q

What global factors can influence the business environment

A

Global factors that influence the business environment:
- Globalisation
- International trade
- Cultural diferences

57
Q

How can suppliers influence business operations

A

Changes in supplier pricing, availability of materials, or global supply chain disruptions can severely affect business operations

58
Q

How can disruptions in logistics affect business operations

A

Disruptions in logistics can affect business operations as they can lead to delayed deliveries, increased costs, and customer dissatisfaction

59
Q

How can technological adoption influence business operations

A

Those who adopt early gain a technological edge, while those who lag behind may lose market share

60
Q

How can innovation influence business operations

A

Businesses that invest in research and development (R&D) and bring innovative products to market often secure a larger market share and customer loyalty

61
Q

What ethical practices are businesses forced to adopt

A

Businesses today face increasing pressure to adopt ethical business practices, whether it’s fair labour practices, ethical sourcing, or promoting transparency in operations

62
Q

Why is Corporate Social Responsibility good for businesses

A

CSR can build stronger reputations and foster goodwill among consumers and stakeholders

63
Q

What is customer satisfaction

A

Customer satisfaction is how well a company meets or exceeds customer expectations

64
Q

What can high customer satisfaction lead to

A

High customer satisfaction can lead to repeat business, customer loyalty, and positive word-of-mouth

65
Q

Why is consistent quality good for customer satisfaction

A

If the product meets or exceeds customer expectations customers are more likely to be satisfied

66
Q

How can innovation boost customer satisfaction

A

Offering innovative products that solve customer problems or fulfil needs can differentiate a business from its competitors, boosting customer satisfaction

67
Q

How does responsive support build customer satisfaction

A

Efficient, friendly, and knowledgeable support helps build trust and satisfaction

68
Q

How does personalised support improve customer satisfaction

A

Tailored experiences make customers feel valued

69
Q

How can support availability improve customer satisfaction

A

Support availability improves customer satisfaction as if the support is available a lot customers can get help whenever they need it

70
Q

What will overpromising and underdelivering leed to

A

Overpromising and underdelivering will lead to dissatisfaction

71
Q

How can clear communication help customer satisfaction

A

Regular communication about customer satisfaction helps customers set accurate expectations

72
Q

Is competitive pricing good for consumer satisfaction

A

Offering competitive pricing in relation to product quality is a key driver of satisfaction

73
Q

How can perceived value improve customer satisfaction

A

If they perceive that the benefits of a product or service outweigh the cost, satisfaction levels rise

74
Q

How easy should a product be to use to improve customer satisfaction

A

A product or service should be easy to use and operate

75
Q

How can convenient access improve customer satisfaction

A

Making it easy for customers to access products or services when and where they want can increase satisfaction

76
Q

How can delivery timing improve customer satisfaction

A

Ensuring that delivery times are clearly communicated and met is crucial for customer satisfaction

77
Q

How can trustworthiness affect customer satisfaction

A

Customers are more likely to be satisfied if they trust that the business will deliver on its promises

78
Q

What do loyalty programs incentivise

A

These programs also incentivize customers to stay loyal and engage with the brand over time

79
Q

How does Activity Based Costing (ABC) work

A

ABC allocates costs based on the actual activities that incur costs in the production process

80
Q

How does the ABC costs allow businesses to assign costs

A

ABC allows businesses to assign indirect costs more accurately to products or services

81
Q

What are the benefits of ABC

A

Benefits of ABC are:
- Provides a clearer picture of which activities are driving costs and allows businesses to identify inefficiencies
- helps improve cost management and pricing strategies by providing more accurate product cost information

82
Q

What is the balance scorecard

A

The Balanced Scorecard is a strategic management tool that provides a more comprehensive view of organizational performance

83
Q

What does the balance scorecard include

A

Balance scorecard includes four perspectives: Financial, Customer, Internal Business Processes, and Learning & Growth

84
Q

What are the benefits of the balance scorecard

A

The benefits of the balance scorecard is that it helps businesses align their activities with their strategic goals, track both financial and non-financial metrics, and improve decision-making

85
Q

What is lean accounting

A

Lean accounting is an approach that supports lean manufacturing principles by simplifying accounting processes

86
Q

What does lean accounting focus on

A

Lean accounting focuses on eliminating waste, improving efficiency, and delivering value to customers

87
Q

What does lean accounting emphasise

A

Lean accounting emphasizes reducing complexity in financial reporting and cost structures, enabling real-time decision-making

88
Q

What are the benefits of lean accounting

A

It simplifies financial reporting, focuses on value-added activities, and supports decision-making in lean environments

Level 5 Management Accounting (8 decks)

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