Management Information Flashcards
CHAPTER 1
Planning
Establishing an objective/identify a problem then choose a strategy to achieve the objective/alleviate the problem
Vision
Set what to achieve / Long term aspiration
Goal
General statements of how to achieve vision / Medium-Long term aspiration
Objectives
Aim of organisation
S M A R T statements of the goal / Short-Medium term aspiration
S - Specific
M - Measurable
A - Achievable
R - Realistic
T - Time-bounded
Budget
Financial plans based on action plan
1 year –> follow action plan timeframe
Strategy/Action plan
Possible course of action/ Detailed plans to achieve objective
Are planning & decision-making linked?
YES/NO
YES
You decide to plan in the first place and the plan you make is a collection of decisions
Main internal source of management information
- Accounting records
- Personnel records
- Production department records
- Detailed time records
Is non-financial information less important to managers compared to financial information ?
YES/NO
NO
Non financial information must be monitored carefully, recorded accurately & taken into account as fully as financial information
Trainee accountant job scope :
1) Produce regular performance statements
2) Review product costs
3) Assess product’s profitability
4) Put value to inventories
Cost centre
Essential building blocks of a costing system
Collecting place for overheads
Etc : Production/service location, function, activity, item of equipment
Cost unit
A unit of product/service which has costs attached to it
Cost centre is also known as……?
Responsibility centre
Department/organisational function whose performance is the direct responsibility of a specific manager
Transaction files
Contains records related to individual transactions
Etc : Invoices
Master files
Contains ‘standing’ or reference data and cumulative transaction data (such as year-to-date figures)
Files
Collections of records with similar characteristic
Etc : Payable ledger
Records
Consists of data relating to one unit of information.
Consists of several fields.
Etc : Supplier account in payable ledger
Fields
Item of data relating to a record
Etc : Account number of supplier, credit limit, name
Key field
Each record in a file includes a key field – an item of data used to identify it.
Etc : Unique supplier code
Efficient & effective coding system
- Easy to use & communicate
- Unique code
- Allow for expansion
- Flexible
- Comprehensive
- Brief
- Minimise error
- Uniform (same length & structure)
- Significant
Block/Group codes
Improvement of sequential code
1st digit indicates the classification
Faceted codes
Improvement of block/group code
Each digit of the code gives information about an item
Hierarchical code
Type of faceted code
Each digit further to the right represents a smaller subset than those to the left
Advantage of faceted code
Give users the ability to find items based on more than one criteria
Features of computerised accounting software
1) Real-time processing
2) Separate modules
3) Link between modules
4) Enforce accountancy rules
5) Automated period-end routines
6) Queries & reporting
Principle of responsibility accounting
Managers should only be judged or held accountable for costs they can influence or control
Key features of profit centre
1) Organisational hierarchy - sits higher than cost centre
2) Seniority of profit centre managers
3) External & internal revenue
4) From cost centre to profit centre
Vertical communication
Up/Down the hierarchy
Etc : CEO gave objective and pass it to head of department
Horizontal communication
Between members of the same team
Etc : team meeting
What is CC in an email
Carbon Copy
–> send a copy of the email
–> not the intended recipient
–> intended recipient know about the CC
What is BCC in an email
Blind Carbon Copy
–> send a copy of the email
–> not the intended recipient
–> without the knowledge of intended & CC’d recipients
BCC recipients know to whom the email has been sent and CC’d;
Memorandums
Concise formal statements issued to communicate something important to the intended recipient
Features of cost accounting but not in financial accounting
- Notional rent
- Marginal costing
- Cost unit
