Management Accounting and Management Information Flashcards
What is Management Accounting?
Management (or cost) accounting is a management information system which analyses data to provide information as a basis for managerial action. The role of management accountants is to provide information that is used for management decision making and control.
Give examples of reports under the remit of the management accountant.
Why is information required for each business transaction or event?
- Recording transactions
- Decision making
- Planning
- Performance measurement
- Control
How might an organisation consider external factors for information collection?
- PESTLE
- Competitors, Customers & Suppliers
- Environmental scanning
What is Environmental scanning?
describes the process of gathering external information from a wide range of sources. Examples of sources include: Government or local authorities, consultancies, or the media.
The mnemonic ‘ACCURATE’ describes the qualities of information needed:
- A – Accurate
- C – Complete
- C – Cost-effective
- U – Understandable
- R – Relevant
- A – Accessible
- T – Timely
- E – Easy to use
What types of management accounting and information systems are there?
- Transaction Processing Systems (TPS)
- Management Information Systems (MIS)
- Executive Information Systems (EIS)
- Decision Support Systems (DSS)
- Knowledge Work Systems (KWS)
- Office Automation Systems (OAS)
- Expert Systems
What is a Transaction Processing Systems (TPS)?
TPS are used for routine tasks in which data items or transactions must be processed so that operations can continue. Transaction processing systems are also sometimes referred to as data processing systems (DPS).
What is a Management Information Systems (MIS)?
MIS convert data from mainly internal sources into information. MIS usually transform data from underlying transaction processing systems (TPS) into summarised files that are used as the basis for management reports. MIS have the following characteristics:
- Support structured decisions at operational and management control levels
- Designed to report on existing operations
- Have little analytical capability
- Relatively inflexible
- Have an internal focus
What is an Executive Information Systems (EIS)?
An EIS pools data from internal and external sources and makes information available to senior managers in an easy-to-use form. AN ESS/EIS is likely to have the following features:
- Flexibility
- Quick response time
- Sophisticated data analysis and modelling tools
What is a Decision Support Systems (DSS)?
DSS combine data and analytical models or data analysis tools to support semi-structured and unstructured decision making.
The objective is to allow the manager to consider a number of alternatives and evaluate them under a variety of potential conditions.
What is a Knowledge Work Systems (KWS)?
KWS are information systems tat facilitate the creation and integration of new knowledge into an organisation. Examples include: computer aided design (CAD); computer aided manufacturing (CAM); specialised financial software that analyses trading situations; and office automation systems (OAS).
What is an Office Automation Systems (OAS)?
OAS are computer systems designed to increase the productivity of data and information workers. OAS support the major activities performed in a typical office such as document management, facilitating communication and managing data. Examples include: word processing; desktop publishing; presentation software; digital filing systems; and email.
What are Expert Systems?
Expert systems are a form of DSS that allow users to benefit from expert knowledge and information. An example is credit scoring.
Credit scoring – consumer finance providers such as banks and credit card companies use credit-scoring techniques to evaluate the potential risk posed by lending money to their customers, and to mitigate losses due to potential bad debts. Consumers credit providers have moved towards the use of proprietary credit scores and strategies.
What is the Lending Code?
The Lending Code is a self-regulatory Lending Code setting minimum standards of good practice when dealing with the following customers in the UK:
- Consumers
- Micro-enterprises
- Charities with an annual income of less than £1 million
What does the Lending Code cover?
The Lending Code covers good practice in relation to:
- Loans
- Credit cards
- Charge cards
- Current account overdrafts
Compliance with the terms of this Code is independently monitored and enforced by the Lending Standards Board
