Week 1 Management Accounting Flashcards
What is management accounting?
process and techniques that focus on effective and efficient use of org resources to support managers in their task of enhancing both customer + shareholder value
- generate info for internal managers to make decisions
Management accting: customer value?
value customer places on particular features of product or service
Management accting: shareholder value
value shareholders or owners place on business
Management accting: resources?
financial and non-financial
organisation capabilities and competencies
what are the 4 difference areas for management vs financial accting?
- users of info
- regulations
- source of data
- nature of info
Management accounting vs financial accounting:
Users of Info
M - Internal: managers and employees at all level
F - External: shareholders, creditors, banks, securities exchange, trade unions and gov agencies
Management accounting vs financial accounting
Regulations
M -No accting standards or external rules imposed. info generated to satisfy managers needs
F - accting standards and corporation law regulate content of external financial reports
Management accounting vs financial accounting
Source of data?
M - Both financial and non-financial data from many sources - core accting system, operational data from production system, market, customer and economic data from sources external to org
F - data from org’s core transaction-based accting system
Management accounting vs financial accounting
Nature of info?
M - past, current and future oriented; subjective; relevant; timely; and supplied at various levels to meet manager’s needs
F - Past; reliable; verifiable; not timely; not always relevant; and highly aggregated
Management accountants within organisations:
what do most large org have at corporate level?
finance function
Management accountants within organisations
accting staff can operate in which 2 divisions/level?
operating division and corporate level
what is vision?
The desired future state or aspiration of an organisation
Used by senior managers
- e.g., Microsoft: “Empower people through great software
anytime, anyplace, and on any device.”
what is mission statement?
Defines the purpose and boundaries of the organisation
- e.g., Nissan: “Nissan provides unique and innovative automotive products and services that deliver superior, measurable values to all stakeholders.”
what are objectives/goals?
- The specific aims of the organisation
- Often quantified
- Relates to a specific period of time
what is strategy? focal point?
a “game plan” that enables a company to attract customers by distinguishing self from competitors
focal point = customers
what are the 3 hierarchy of strategy?
- corporate strategy (corporate headquarter)
- business - division level - strategy (strategic business unit)
- Functional strategy (manufacturing, finance, HR)
what decision made at corporate level strategy?
in what business we operate - deals with entire org inc different business unit
decision made at business level?
how should we compete in that business? deals with partic business unit
decision at strategy implementation level
what system/structure should be in place to support strategies
what is involved at corporate strategy?
- Choices about the types of businesses to operate
- how best to structure and finance the organisation
- In publicly listed companies, the choice of corporate strategy is influenced by the expectations of major shareholders and securities market
what is involved at business (or competitive) strategy?
- The way a business competes within its chosen market
* Distinct business strategies for each business unit
what is competitive advantage?
Advantages of one business over another that are difficult to imitate, achieved by cost leadership and product differentiation
what is cost leadership?
sell products and services at lower prices. ― Economies of production ― Superior process technologies ― Tight cost control E.G., Toyota cars
what is product differentiation?
Offer different products/services In quality, delivery, operation, etc. ― Superior quality ― customer service ― delivery performance ― product features E.G., BMW cars
