Module 1

Question 1

What is Management Accounting?

Answer 1

Management accounting refers to the process and techniques that focus on the effective and efficient use of organizational resources to support managers in their tasks of enhancing both customer value and shareholder value.

Question 2

What is customer value?

Answer 2

Customer Value is the value that a customer places on particular features of a product.

Question 3

What is Shareholder value?

Answer 3

Shareholder value involves improving the worth of the business from the shareholder’s or owner’s perspective.

Question 4

What is a management accounting system?

Answer 4

A management accounting system is an information system that produces the information required by managers to create value and manage resources.

Question 5

What is a vision?

Answer 5

A vision describes the desired future state or aspiration of the organisation.

Question 6

What is a mission statement?

Answer 6

A mission statement defines the purpose and boundaries of the organisation.

Question 7

What is an objective (or goal)?

Answer 7

An objective or gaoal are the specific statements of what the organisation aims to achieve, often quantified and relating to a specific period of time.

Question 8

What are strategies of an organisation?

Answer 8

The strategies of an organisation specify the direction that the organisation intends to take over the long term to achieve its objectives.

Question 9

What is a corporate strategy?

Answer 9

Corporate strategy involves making choices about the types of businesses in which the organisation as a whole will operate.

Question 10

What is a business (or competitive) strategy?

Answer 10

A business (or competitive) strategy is concerned with the way that a business competes within its chosen market.

Question 11

What is strategy implementation?

Answer 11

Strategy implementation involves planning and managing the implementation of strategies.

Question 12

What is competitive advantage?

Answer 12

Competitive advantage refers to advantages that a business may have over another that are difficult to imitate.

Question 13

What is cost leadership?

Answer 13

Cost leadership is when a business can sell its goods or services at a lower price than its competitors.

Question 14

What is product differentialtion?

Answer 14

Product differentiation is when a business gains a competitive advantage by offering goods or services that have characteristics that are different from those offered by competitors.

Question 15

What is planning?

Answer 15

Planning is a broad concept that is concerned with formulating the direction for future operations.

Question 16

What is a budget?

Answer 16

A budget is an example of a detailed plan that summarises the financial consequences of an organizations operating activities for a specific future period.

Question 17

What is controlling?

Answer 17

Control involves putting in place mechanisms to ensure that operations proceed according to plan and that objectives are reached.

Question 18

What is GAAP?

Answer 18

Generally Accepted Accounting Principles.

Question 19

What is contingency theory?

Answer 19

Contingency theory argues that the design of an organization’s management system may be influenced by a range of factors that reflect the context within which the organization operates, including the external environment, technology, organizational structure, size, strategy, and culture.

Question 20

What is insttitutional theory?

Answer 20

According to institutional theory, managers may adopt certain management accounting practices to achieve legitimacy both within and beyond the organization.