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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 information 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

Types of internal stakeholders

A

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

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7
Q

Types of 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
What do budget reports help forecast
Budget reports help forecast future financial performance
26
What is cost analysis
Cost analysis is a detailed breakdown of costs associated with producing goods or providing service
27
How does the income statement assist in decision making
Income statements assists in decision making as it may decide to cut down on unnecessary expenses or look for more cost-effective suppliers
28
How do budget reports assist in decision making
Budget reports assist in decision making by comparing actual performance against budgeted figures, managers can make decisions about adjusting strategies
29
How does cost analysis assist in decision making
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
30
What does a cash flow statement show
Cash flow statement shows the inflow and outflow of cash over a period, helping managers understand the company’s liquidity position
31
What does return on investment(ROI) and net present value evaluate(NPV)
Return on investment and net present value helps evaluate the potential return on new projects or investments
32
What does calculating ROI and NPV help assess
Calculating ROI or NPV helps assess whether an investment will generate a positive return over time
33
What does the balance sheet provide
The balance sheet provides an overview of a company’s assets, liabilities, and shareholders’ equity
34
What does the balance sheet help determine
The balance sheet helps determine the company’s financial health, solvency, and ability to meet long-term obligations
35
How can the balance sheet influence decision making
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
36
What can businesses determine with break even analysis
With break even analysis businesses can determine the level of sales necessary to cover costs and begin making a profit
37
How does break even analysis influence decision making
Break even analysis influences decision making as it helps in setting realistic sales targets, deciding on pricing strategies
38
What is variance allowance
Variance allowance is comparing actual results with planned or expected results, identifying variances
39
How does variance allowance impact decision making
Variance allowance influences decision making because management can assess risks and take corrective actions
40
How does tax planning help businesses
Tax planning helps businesses stay compliant with tax laws and identify tax-saving opportunities through careful planning
41
How does tax planning help decision making
Tax planning helps decision making as managers can make decisions about the timing of strategies to optimize the company’s tax liabilities
42
How do companies use Key Performance Indicators (KPI)
Financial and non-financial accounting data are often used to track the performance of departments, products, or employees through KPIs
43
How do KPIs influence decision making
KPIs influence decision making as if a department falls short of KPIs management can decide to reorganize, retrain employees
44
What are leverage ratios
Leverage ratios help assess the company’s use of debt and its ability to service debt
45
How do leverage rations influence decision making
Leverage ratios impact decision making as high leverage may prompt decisions to reduce debt levels
46
What can businesses evaluate with profitability analysis
With profitability analysis businesses can evaluate the profitability of different products, markets, or segments
47
How does profitability analysis influence decision making
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
48
What economic factors influence the business envroment
Economic factors that influence the business environment are: - Economic conditions - Market demand and supply - Global economy
49
What political and legal factors influence the business environment
Political and legal factors that influence the business environment are: - Government policies - Political stability - Regulatory environment
50
What technological factors influence the business environment
Technological factors that influence the business environment are: - Technological advancements - Research and Development - Cybersecurity and Data protection
51
What Social and Cultural factors can influence the business environment
Social and cultural factors that can influence the business environment are: - Consumer preferences and trends - Demographics - Cultural values
52
What Environmental factors can influence the business environment
Environmental factors that influence the business environment: - Climate Change and Environmental Regulations - Natural disasters - Sustainability
53
What Competitive factors can influence the business environment
Competitive factors that influence the business environment: - Competition - Market structure - Strategic alliance
54
What global factors can influence the business environment
Global factors that influence the business environment: - Globalisation - International trade - Cultural diferences
55
How can suppliers influence business operations
Changes in supplier pricing, availability of materials, or global supply chain disruptions can severely affect business operations
56
How can disruptions in logistics affect business operations
Disruptions in logistics can affect business operations as they can lead to delayed deliveries, increased costs, and customer dissatisfaction
57
How can technological adoption influence business operations
Those who adopt early gain a technological edge, while those who lag behind may lose market share
58
How can innovation influence business operations
Businesses that invest in research and development (R&D) and bring innovative products to market often secure a larger market share and customer loyalty
59
What ethical practices are businesses forced to adopt
Businesses today face increasing pressure to adopt ethical business practices, whether it's fair labour practices, ethical sourcing, or promoting transparency in operations
60
Why is Corporate Social Responsibility good for businesses
CSR can build stronger reputations and foster goodwill among consumers and stakeholders
61
What is customer satisfaction
Customer satisfaction is how well a company meets or exceeds customer expectations
62
What can high customer satisfaction lead to
High customer satisfaction can lead to repeat business, customer loyalty, and positive word-of-mouth
63
Why is consistent quality good for customer satisfaction
If the product meets or exceeds customer expectations customers are more likely to be satisfied
64
How can innovation boost customer satisfaction
Offering innovative products that solve customer problems or fulfil needs can differentiate a business from its competitors, boosting customer satisfaction
65
How does responsive support build customer satisfaction
Efficient, friendly, and knowledgeable support helps build trust and satisfaction
66
How does personalised support improve customer satisfaction
Tailored experiences make customers feel valued
67
How can support availability improve customer satisfaction
Support availability improves customer satisfaction as if the support is available a lot customers can get help whenever they need it
68
What will overpromising and underdelivering leed to
Overpromising and underdelivering will lead to dissatisfaction
69
How can clear communication help customer satisfaction
Regular communication about customer satisfaction helps customers set accurate expectations
70
Is competitive pricing good for consumer satisfaction
Offering competitive pricing in relation to product quality is a key driver of satisfaction
71
How can perceived value improve customer satisfaction
If they perceive that the benefits of a product or service outweigh the cost, satisfaction levels rise
72
How easy should a product be to use to improve customer satisfaction
A product or service should be easy to use and operate
73
How can convenient access improve customer satisfaction
Making it easy for customers to access products or services when and where they want can increase satisfaction
74
How can delivery timing improve customer satisfaction
Ensuring that delivery times are clearly communicated and met is crucial for customer satisfaction
75
How can trustworthiness affect customer satisfaction
Customers are more likely to be satisfied if they trust that the business will deliver on its promises
76
What do loyalty programs incentivise
These programs also incentivize customers to stay loyal and engage with the brand over time
77
How does Activity Based Costing (ABC) work
ABC allocates costs based on the actual activities that incur costs in the production process
78
How does the ABC costs allow businesses to assign costs
ABC allows businesses to assign indirect costs more accurately to products or services
79
What are the benefits of ABC
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
80
What is the balance scorecard
The Balanced Scorecard is a strategic management tool that provides a more comprehensive view of organizational performance
81
What does the balance scorecard include
Balance scorecard includes four perspectives: Financial, Customer, Internal Business Processes, and Learning & Growth
82
What are the benefits of the balance scorecard
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
83
What is lean accounting
Lean accounting is an approach that supports lean manufacturing principles by simplifying accounting processes
84
What does lean accounting focus on
Lean accounting focuses on eliminating waste, improving efficiency, and delivering value to customers
85
What does lean accounting emphasise
Lean accounting emphasizes reducing complexity in financial reporting and cost structures, enabling real-time decision-making
86
What are the benefits of lean accounting
It simplifies financial reporting, focuses on value-added activities, and supports decision-making in lean environments

Level 5 Management Accounting (13 decks)

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