Lecture 1- Role of MA Flashcards
What is management accounting concerned with?
- MA is all about providing decision-relevant information
- It could be for control or decision making in itself
- It could be for performance management & evaluation
What do management accountants do?
- Inform strategic decisions and formulate business strategy
- Plan long, medium and short-run operations
- Control operations and ensure the efficient use of resources
- Inform operational decisions
- Measure and record financial & non-financial performance to management and other stakeholders
- Implement corporate governance procedures, risk management & internal controls
What are the main differences between financial accounting and management accounting?
The reports FA produce are often general purpose and are only a broad overview. Whereas MA has a specific purpose and goes into considerable detail.
What is cost accounting?
Cost accounting provides information to both management and financial accounting. It measures and reports financial and non-financial data that relates to the cost of acquiring or consuming resources by an organization.
What is cost management?
Cost Management describes the activities of managers in short-run and long-run planning and control of costs. It includes the continuous reduction of costs. It is a key part of general management strategies and their implementation.
What is the decision-making, planning & control process?
Planning process
1) Identify objectives
2) Search for alternative courses of action
3) Gather data for alternatives
4) Choose alternative course of action
5) Implement the decision
Control process
6) Compare actual outcomes with planned outcomes
7) Respond to divergences from plan
What is the role of the management accounting in terms of planning?
MA helps to formulate plans and co-ordinate these plans into budgets for the business as a whole
What is the role of a management accounting in terms of controlling?
MA produce performance reports that compare actual outcomes with planned outcomes
What is the role of a management accounting in terms of organizing?
MA develop accounting reporting systems that are closely related to organizational structure
What’s is the role of a mangement accountant in terms of communicating?
MA can improvise the communication function by producing and maintaining an effective communication and reporting system (e.g. the budget and performance reporting process)
What is the role of a management accounting in terms of motivating?
The budgets and performance reports produced by MA’s have an important influence on the motivation of managers and employees
What is the role of a management accountants in terms of decision-making?
MA provide guidance for decision-making and problem-solving
