Topic 1B: Accounting for Management 2: FA vs MA

Question 1

What data does management accounting use?

Answer 1

The same source data as financial accounting

Question 2

What does management systems provide in terms of information?

Answer 2

Information specifically for managers in an organisations

Question 3

What does financial accounting systems ensure?

Answer 3

Ensure that the assets and liabilities of a business are properly accounted for and provide information about profits and so on for other interested parties and shareholders

Question 4

What is the difference between financial accounting and management accounting in terms of purpose

Answer 4

Financial accounts provide information over a defined period and the state of affairs at the end of that period, whilst management accounting are used to aid management record, plan and control and for decision making puporses

Question 5

What is the difference between management accounting and financial accounting in terms of legality?

Answer 5

Limited liabilities must by law prepare finanicial accounts, whilst there is not formality for management accounts

Question 6

What is the difference between financial accounts and management accounts in terms of format?

Answer 6

The format of financial accounts is determined by local law, whilst that of management accounts is at management discretions - no strict rules govern the way prepared or presented.

Question 7

What is the difference between financial accounts and management accounts in terms of what they concentrate on within the business?

Answer 7

Financial accounts concentrate on the business as a whole whilst management accounts can focus on specific areas of an organisations activities (information may be produced to aid a decision rather than end rpdocut of a decision)

Question 8

What is the difference between financial accounting and management accounting in terms of money?

Answer 8

Financial accounting is of a monetary nature, whilst management accounts have non-monetary measures

Question 9

What is the difference between management accounting and financial accounting in terms of the past?

Answer 9

Financial accounting is a historic picture of past operations, whilst management accounts are both a historical record and future planning tool