Management Accounting + Financial Accounting Flashcards
What is the primary purpose of management accounting?
To provide information to internal users, such as managers of individual departments
Who are the internal users of management accounting?
Managers of individual departments
List the roles that management accounting assists in the business.
- Planning
- Co-ordinating
- Controlling
- Communicating
- Motivating
- Decision making
How does management accounting assist in planning?
It provides management information to make short, medium, and long-term decisions
What role does management accounting play in co-ordinating departments?
It assists management of different departments to work together
What is the controlling function of management accounting?
Comparing results from a budget to actual performance to investigate variances
How does management accounting facilitate communication?
By communicating relevant financial information to departmental managers
In what way does management accounting motivate managers?
By providing targets for managers to improve overall business performance
What is the most important use of management accounting information?
To make informed decisions for the future of the business
What is the focus of management accounting in terms of time?
Future planning using budgets and forecasts
What type of users primarily utilize financial accounting?
External users, such as HMRC, shareholders, and potential investors
What does financial accounting record?
The income and expenses of an organization over a given period, usually one year
What are the main financial statements produced in financial accounting?
- Income Statement
- Statement of Financial Position
What is the purpose of the information gathered in financial accounting?
To complete tax returns and assess the tax liability for the business
What is the primary focus of financial accounting?
The past and the calculation of profits
