Topic 1A: Accounting for Management 1: Introduction Flashcards
What is the difference between cost accounting and management accounting?
Cost accounting and management accounting are not the same thing: cost accounting is part of management accounting.
What is cost accounting concerned with?
Cost accounting provides a bank of data for the management accountant to use and is concerned with:
- Preparing statements
- Cost data collection
- Applying cost to inventory, products and servies.
What is management accounting concerned with?
Concerned with the provision and the use of accounting information. this information is used by the managers of the business to assist them when making decisions and to achieve the owners overall objective, which is usually to maximise wealth by maximising profit.
What are the main areas of management accounting?
(5)
a.) Costing - what is the cost of the goods and services to help set prices and to value inventory in the statement of financial position
b.) Planning - involves defining objectives and assessing future cost and revenues to set up a budget - forces management to think ahead.
c.) Control - once the plans have been made, the business must ensure that they are being followed and address any inefficiencies
d.) Decision making - There are many decisions that managers may have to make such as
- what should we produce>
- how should we finance the business?
- is a project worthwhile?
e.) performance evaluation
What are the four M’s in the planing process?
Materials
Machine time
Manpower
Money
What are the four stages of the planning process?
Assessment stage: assess the external environment
Assess the organisation, Assess the future, Assess expectations
Objective stage: evaluate corporate objectives
Evaluation stage: consider alternative ways of achieving objectives
Corporate plan: which involves production planning, resource planing, product planning as well as research and development planning, which would lead to detailed operational plans which implement the corporate plan on a monthly, quarterly or annual basis. Operation plans include short term budgets, standards and objectives .
What are the two stages in the control process?
The performance of the organisation - as set out in the detailed operational pans in compared with the actual performance of the organisation on a regular and continuous basis with any deviations from the plan being identified and corrective action taken
The corporate plan - is reviewed in the light of comparisons made and any changes in the parameters on which the plan was based to assess whether the objectives of the plan can be achieved . The plan is modified as needed before any damage to the organisations future success occurs
What is found in the decision making process (WHAT are the steps)?
- Identify goals, objectives ort problems
- Identify alternate solutions and opps which might contribute to achieving them
- Collect and analyse relevant data about each alternative
- Make the choice and decision. State the expected outcome and check that the expected outcome is in keeping with overall goals and objectives
- Implement the decision.
- Obtain data about the actual results
- Compare actual resultswith the expected outcome and evaluate achievements
What is performance evaluation?
This is where the performance of divisions and employees can be assessed by comparing their performance against budgets or individual targets. Performance evaluation is classed as part of control.
What was suggested by R N Anthony?
Suggested that the activities of planning, control
What is the essence of strat planning according to R N Anthony?
It has been suggested that the activities of planning, control and decision making should not be separated.
What is strategic planning?
The process of deciding on objectives of the organisation, on changes in these objectives, on the resources used to attain them, and on the policies that are to govern the acquisition, use and deposition of these resources
What is corporate planning?
Involves selecting appropriate strategies so as to prepare a long term plan to attain objectives, examples include the selection o products and markets, the required levels of company profitability and the purchase an disposal of subsidiary companies or major non-current assets.
What is tactical control?
The process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of an organisations objectives.
What are resources commonly referred to as?
The four M’s: manpower, materials, machinery and money
