What is Management Accounting? Flashcards
What is management accounting? (give an example)
It provides information for managers of an organisation who direct and control its operations (internal use) - Decision making, devising plans and performance management
What is financial accounting?
It provides information to stockholders, creditors and others who are outside the organisation (external use)
What is the main difference between management and financial accounting?
The presentation
What does management accounting operate between?
Tactical management and operational management
What are the responsibilities for managers in management accounting?
Planning, direct and motivating, decision making and controlling
What is the important phrase to remember in management accounting?
Information for control and decision making
What is information for control and decision making?
It is used to inform managers who can make decisions on a day-to-day basis. It can entail monetary and non-monetary information
What is planning?
Maximising products and budgeting. It is the first level of management.
What does the planning process affect?
It affects revenue and costs which are essential to the organisation
What is directing and motivating?
It involves mobilising people to implement a plan and motivating and effectively directing people. It is also the tactical level.
What is controlling?
It is concerned with ensuring the plan is being followed, e.g. providing feedback and identifying potential problems and opportunities. It also feeds back to the first stage (planning)
What is the planning and control cycle?
It is a 4 stage process where decision making crosses across all four parts of the decision process
What are the differences between users in financial and management accounting?
Financial: external users make financial decisions.
Management: managers who plan and control
What are the differences between time focus in financial and management accounting?
Financial: Historical perspective.
Management: Future emphasis.
What are the differences between data in financial and management accounting?
Financial: Emphasis on verifiability
Management: Emphasis on relevance for planning and control
What are the differences between precision vs timeliness in financial and management accounting?
Financial: Emphasis on precision
Management: Emphasis on timeliness
What are the differences between subject in financial and management accounting?
Financial: Primary focus on whole organisation
Management: Focuses on segments of organisation
What are the differences between requirements in financial and management accounting?
Financial: Must follow formats (IFRS)
Management: Doesn’t need to follow any formats
What are the characteristics of management accounting?
Emphasis on the future, relevance and flexibility of data, less emphasis on precision, segments of an organisation and not mandatory/no standards/not governed
What is decision making?
An integral part in managerial skill which involves selecting a course of action from competing alternatives
