Principle Of Costings Flashcards
What do businesses gather a lot of information from?
Day to day transactions
Example of day to day transaction?
Sale trans (how many units r sold)
Cost of making unit, how much its being sold for
Records of people employed (salary)
Inventory files
What do businesses assess day to day sales?
Management will be making short term and long term decisions
Making plans
Control
Example of short term decision?
What products to make and how much raw material to order
Example of long term decision
Which products to stop making and how many staff employing
What’s involved in making plans?
Long term operation, this typically involves the prep of budgets
What is involved in control?
Prev come up with budgets, and then management will look at what actually happened
What are budgets?
An estimate
4 examples of useful sources of information for managers
Payroll system
Number of machines in production
Analysis of customer orders
Minutes from board meetings
Example of planning
Preparing a budget
Example of control
Comparing actual results for a period with the original budget
Example of decision making
Settling the selling price of a new product
What is financial accounting?
Producing final accounts, end of year
What is management accounting?
Looking forward, so planning, controlling and decision making
Difference between financial and management accounting?
Financial looks backwards, and management looks forward
