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Accounting, Controlling, Auditing > Module 1: Management Accounting > Flashcards

Module 1: Management Accounting Flashcards

1
Q

Why Do We Need Management Accounting?

A

 Acceptance / decline of nonrecurring special orders
 Calculation / pricing
 Setting minimum level of prices
 Insourcing / outsourcing
 Level of stockkeeping
 Product mix and product mix policy
 Expansion / reduction of client base
 Replacement investments

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2
Q

Management Accounting : Purpose of information

A

Help managers make decisions to fulfill an organization’s goal

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3
Q

Financial Accounting: Purpose of information

A

Communicate an organization’s financial position to investors, banks, regulators, and other outside parties

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4
Q

Management Accounting: Primary users

A

Managers of the organization

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5
Q

Financial Accounting: Primary users

A

External users such as investors, banks, regulators, and suppliers

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6
Q

Management Accounting: Focus and emphasis

A

Future-oriented (budget for 2021 prepared in 2020)

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7
Q

Financial Accounting: Focus and emphasis

A

Past-oriented (reports on 2020, performance prepared in 2021)

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8
Q

Management Accounting: Rules of measurement and reporting

A

Internal measures and reports do not have to follow IFRS/GAAP but are based on cost-benefit analysis

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9
Q

Financial Accounting: Rules of measurement and reporting

A

Financial statements must be prepared in accordance with IFRS/GAAP and be certified by external, independent auditors

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10
Q

Management Accounting: time span and
type of reports

A

Varies from hourly information to 15 to 20 years, with financial and nonfinancial reports on products, departments, territories, and strategies

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11
Q

Financial Accounting: time span and
type of reports

A

Annual and quarterly financial reports, primarily on the company as a whole

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12
Q

Management Accounting: Behavioral implications

A

Designed to influence the behavior of
managers and other employees

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13
Q

Financial Accounting: Behaviral implications

A

Primarily reports economic events but also influences behavior because manager‘s compensation is often based on reported financial results

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14
Q

Strategic Decisions and Management Accounting – Key Success Factors (management accounting)

A
  • Cost and Efficiency
    -Quality
    -Time
  • Innovation
    -Sustainability
    –> page 7
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15
Q

How Does the Management Accounting Process Work? (PDCA)

A

Plan, do, check, act

P: Define & Analyze Problem and identify Root Cause

D: Devise Solution, Develop Detailed Action Plan, Implement Plan

C: Confirm Outcomes against Plan, Identify Deviations / Issues

A: Standardize Solution, Review & Define Next Issues

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16
Q

Decision Planning

A

 Choosing goals
 Predicting results under various ways of achieving those goals
 Deciding how to attain the desired goals

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17
Q

Decision Control

A

 Action that implements the planning decision
 Performance evaluation of the personnel and operations

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18
Q

Key Management Accounting Guidelines

A
  1. Cost-benefit approach
  2. Full recognition to behavioral as well as technical considerations
  3. Use different costs for different purposes
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19
Q

Cost-benefit approach

A

A cost-benefit approach should be used in order to spend resources if they promote decision making that better attains organization goals in relation to the costs of those resources

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20
Q

Full recognition to behavioral as well as technical considerations

A

A management accounting system should have two simultaneous missions for providing information:

 To help managers make wise economic decisions

 To help managers and other employees to aim and strive for goals of the organization

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21
Q

Use different costs for different purpose

A

A cost concept used for the external reporting purpose need not be the appropriate concept for the purpose of internal routine reporting to managers

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22
Q

Incorporation of Management Accounting into the Organizational Structure

A

 Line management is directly responsible for attaining the objectives of the organization

 Staff management exists to provide advice and assistance to line management

 The Chief Financial Officer (CFO) is overseeing the financial operations of an organization

 The controller, also called the chief accounting officer (CAO), is the financial executive primarily responsible for both management accounting and financial accounting

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23
Q

Organizational Structure and the Management Accountant

A

page 15

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24
Q

Management Accounting and Ethical Principles

A
  • Competence
    -Confidentiality
  • Integrity
    -Credibility
  • Resolution of Ethical Conflict
25
Q

Cost accounting: defintion

A

is a category of managerial accounting that aims to capture a company’s total cost of value creation

26
Q

Costs: definition

A

resources sacrificed to achieve a specific objective
–> measured as a monetary amount that is spent to acquire factors of production or resources that are used to produce a particular output.

27
Q

Total costs is composed of :

A

direct and indirect cost and variable and Fixe costs

28
Q

Direct cost

A

are all costs that are directly related to a cost object and can be traced in an economically feasible way

29
Q

Indirect cost

A

are all costs that are common to several cost objects but cannot be traced (in an economically feasible way) to a single one

30
Q

Variable Costs

A

change in total in proportion to changes in the related level of total activity or volume of output

31
Q

Fixed Cost

A

remain unchanged in total for a given time period, despite wide changes in the related level of total activity or volume of output

32
Q

Fixed cost are always …costs

A

indirect costs

33
Q

Direct cost are.. in most of the case

A

variable costs

34
Q

Inventorial cost: defintion

A

all costs of a product recorded as an asset on the balance sheet, only expensed as cost of goods sold in the income statement when a product is sold

35
Q

Period cost: defintion

A

all costs in the income statement other than costs of goods sold
 other costs such as design-, marketing- or distribution-costs
 expect these costs to increase revenues in a specific period

36
Q

Gross margin calculation

A

Revenues - Cost of goods sold

37
Q

What does the flow of revenues and costs look like for a merchandising company?

A

 the flow of revenues and costs in the income statement are the same.
 Inventoriable costs are only expensed as the cost of goods sold when a product is sold, and period cost exists as well.

38
Q

What are the difference for merchandising company in the balance sheet ?

A
  • merchandising companies do not produce goods or services –> no positions such as direct material or work-in-progress inventory.
    = inventoriable costs are recorded in the balance sheet position “Merchandise Inventory”.
39
Q

The need for Uniform Terms

A
  1. Uniform defintiomn (direct and indirect costs)
  2. Different product cost for different purpose
    - R&D costs
    -Design costs
    -Production Costs
    -Marketing Costs
    -Distribution Costs
40
Q

Product cost : for financial Statements

A

Inventorial costs

41
Q

Acceptance/Decline of Nonrecurring Special Orders (why management accounting is use)

A

Helps in evaluating whether a special order will contribute to profitability

42
Q

Calculation/Pricing (why management accounting is use)

A

Assists in setting prices by analyzing costs such as direct materials, labor, and overhead. This ensures that prices are competitive while also covering costs and achieving profit margins.

43
Q

Setting Minimum Level of Prices (why management accounting is use)

A

Helps determine the minimum price at which a company can sell its products or services without incurring a loss.

44
Q

Insourcing/Outsourcing (why management accounting is use)

A

informs the decision to insource or outsource by comparing the costs and benefits of each option.

–> pratique qui consiste à intégrer dans son entreprise les ressources d’un prestataire externe.

45
Q

Level of Stockkeeping (why management accounting is use)

A

Assists in managing inventory levels by analyzing costs of holding stock (e.g., storage, insurance) versus potential stockout costs

46
Q

Product Mix and Product Mix Policy (why management accounting is use)

A

Helps in deciding which products to focus on by analyzing profitability, contribution margin, and the demand for each product

47
Q

Expansion/Reduction of Client Base (why management accounting is use)

A

Evaluates the costs and benefits of expanding or reducing the client base

48
Q

Replacement Investments (why management accounting is use)

A

Provides analysis on the financial impact of replacing old equipment or assets

49
Q

Cost and Efficiency: definition

A

Management accounting information helps managers calculate a target cost for its products.

50
Q

Quality : definition

A

Management accounting information helps to evaluate the costs and revenue benefits of continuously improving the quality of products and processes

51
Q

Time: definition

A

Management accounting information helps to quantify the costs and benefits of reducing delivery times and meeting promised delivery dates.

52
Q

Innovation: definition

A

Managers rely on management accounting information to evaluate alternative R&D and investment decisions and the costs and benefits of implementing innovative business models, services, and marketing plans.

53
Q

Sustainability: definition

A

Companies are increasingly applying the key success factors of cost and efficiency, quality, time, and innovation to promote sustainability.

54
Q

competence (management accounting)

A
  • Maintain professional competence

-Follow applicable laws, regulations and standards

-Prepare complete and clear reports after appropriate analysis

55
Q

Confidentiality (management accounting)

A
  • Do not disclose confidential information unless legally obliged to do so
  • Ensure that subordinates do not disclose confidential information
  • Do not use confidential information for personal advantage
56
Q

Integrity (management accounting)

A
  • Avoid conflicts of interest and advise others of potential conflicts
  • Recognize and communicate personal and professional limitations
  • Refuse gifts or favors that might influence behavior
  • Do not subvert organization’s legitimate objectives
57
Q

Credibility (management accounting)

A
  • Communicate information fairly and objectively
  • Disclose all information that could influence user’s understanding
  • Disclose delays or deficiencies
58
Q

Reduce version of management accounting process

A
  • Planning
  • Control

Accounting, Controlling, Auditing (12 decks)

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