Week 5 - An Introduction to Management Accounting II

Question 1

What are the characteristics of useful information?

Answer 1

Real Unicorns Can Read Time Correctly
- relevant
- understandable
- comparable
- reliable
- timely (give enough time to take action)
- complete

Question 2

What is the mnemonic for the characteristics of useful information?

Answer 2

Real Unicorns Can Read Time Correctly

Question 3

What should information provision be aimed at?

Answer 3

Achieving organisational objectives

Question 4

What are some problems we can encounter with information provision?

Answer 4

• objectives may be poorly defined
• there may be several objectives in conflict
• objectives could change overtime

Question 5

What is the cost/benefit criterion?

Answer 5

The idea that the cost of obtaining information should not outweigh the benefit of possessing it

Question 6

Look at the cost/benefit criterion curve on your homescreen

Question 7

Which curve on the cost/benefit criterion curve is ‘r’ shaped?

Answer 7

The benefit curve

Question 8

What are the four costs of trying to acquire useful information?

Answer 8

• salary of accounting personnel
• cost of purchasing and operating computers
• cost of gathering, storing and processing data
• cost of managers’ time to read, understand and use the information

Question 9

What are the five benefits of acquiring useful information?

Answer 9

• improved decisions
• more effective planning
• greater operational efficiency
• better control
• improved customer and shareholder value

Question 10

What are the five factors that increase the need for management accounting information?

Answer 10

• increasing complexity and size of organisations
• increased emphasis on quality
• rapid development and implementation of technology
• world-wide competition
• regulatory environment (e.g British standards)

Question 11

What are the three major forces that have caused organisations to evolve?

Answer 11

• globalisation
• focus on what customer wants (preferences)
• technical obsolescence (outdated)

Question 12

What are the three current issues for management accounting?

Answer 12

• constant evolution of organisations
• changing organisational forms - flatter, network structures, changing the info required
• increased importance of service industries and changing approaches to public sector management

Question 13

What do ethical accounting practices do?

Answer 13

Build trust and promote loyal, productive relationships with users of accounting information