Lecture 1 - What Is Managment Accounting? Flashcards

1
Q

What two main characteristics does useful accounting information have?

A

Relevance

Reliability

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2
Q

What Elemis fall under ‘Relevance’?

A
  • Timeliness
  • Predictive value
  • Feedback Value
  • Consistency
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3
Q

What elements fall under ‘Reliability’?

A
  • Verifiability
  • Neutrality
  • Faithful representation
  • Completeness
  • Consistency
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4
Q

What is the issue with providing a lot of accounting information?

A

This information costs a lot of money.
At some point the value of the extra information provided is less than the cost of attaining the information.
Theoretically, there is an optimum level of information.

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5
Q

What are the 4 stages in the accounting information system for management accounting?

A

1) Information identification
2) Information recording
3) Information analysis
4) Information reporting

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6
Q

In order to have information in a timely manner, what may have to be sacrificed?

A

Reliability may have to be sacrificed

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7
Q

What are the first 2 stages of the management accounting information system concerned with?

A

Preparation of information

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8
Q

What are the second two stages of the management accounting information system concerned with?

A

The Usage of information

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9
Q

What is the difference between ‘Managerial’ and ‘Financial’ accounting?

A

Managerial = Produce Financial statements for internal parties.

Financial = Produce Financial Statements for external parties.

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10
Q

What sort of things are influenced by the analysis of management accounting?

A

Selling price, Costs, competitive positions, profitability of products/services

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11
Q

What has happened to the product life-cycle in recent times?

A

It has decreased

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12
Q

Management accounting is better than financial accounting when making decisions…

A

Day to day

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13
Q

To aid decision makers, management accounting should provide…

A

Meaningful and useful information

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14
Q

In theory, there is a ……. between relevance and reliability

A

Trade-off

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15
Q

What happens to the ‘Marginal Value’ of information as more is provided?

A

It starts to level off and ultimately decreases

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16
Q

What are the 5 Key characteristics that differentiate Financial and management accounting?

A
  • Legal Requirements
  • Focus
  • GAAP
  • Time dimension
  • Reporting Frequency