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44 Cards in this Set
- Front
- Back
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What is the role of management accounting?
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To provide information to decision makers and provide advice based on that information.
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What areas and type of information does a management accountant provide?
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They cover all areas of strategy and operations and they provide information to assist with Planning, Control and Decision-Making
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What are the three attributes identified by Simons (1950)?
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1. Scorekeeping - monitor performance
2. Attention-Directing - Indicate problem areas 3. Problem-Solving - Evaluating alternative responses |
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What purpose does management accounting serve?
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- Make decisions
- Plan - Monitor performance - Measure - Implement processors |
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What is a cross-functional team?
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A small group of individuals, with different expertise, taken from many different parts and levels of an organisation, which comes together to work towards a common purpose or goal.
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What are the benefits of a cross-functional team?
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- Improved coordination and integration of systems or activities
- Helping establish goals and set priorities - Assisting with problem-solving and decision making - Ensuring the team maintains an organisation-wide perspective |
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What are performance measures of management accounting?
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- Quality of the information provided
- Value for money - Availability of accounting staff - Flexibility: to satisfy users |
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What are financial accounts?
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Prepared for individuals external to the organisation
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What are management accounts?
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Prepared for internal use by managers
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What is the difference between financial and management accounts?
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The data used to prepare both accounts are the same, but the difference arises because the data is analysed differently.
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What are the differences between Financial accounts and Management accounts?
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- FA are used for external use, while MA are used for internal use.
- FA detail performance of a defined period, while MA aid in recording, planning, and controlling an organisations activities (help decision making). - FA is a legal requirement for limited companies, and is not for MA. - Format of FA determined by law, while MA are determined by management. - FA covers a business as a whole, while MA focuses on specific areas. - FA is monetary based, while MA is non-monetary based. - FA is historically based, while MA is a historic record and used as a future planning tool. |
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Is Cost accounting part of management accounting and why?
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Yes, it is part a part of management accounting by providing source data to management
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What is Cost accounting concerned with?
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- Preparing cost estimates of new and current products
- Cost data collection - Applying costs to inventory, products and services |
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What is management accounting concerned with?
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Interpretation and assessment of data
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What does cost accounting measure?
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- G/S
- Revenue - Profitability - Selling prices - Value of inventories of goods - Future costs - How actual costs compare with budgeted costs |
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What is long term planning also know as?
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Corporate or strategic planning
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What is long term planning?
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Selecting appropriate strategies to prepare a long-term plan to attain the organisation's objectives.
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What are the objectives of an organisation?
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- Vision
- Mission - Objective - Strategy |
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What are the four elements of long term strategic planning?
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1. The assessment stage
2. The objective stage 3. The evaluation stage 4. The corporate plan |
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What is the sequence in the decision making process?
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1. Define the problem
2. Identify the decision making criteria 3. Develop alternatives 4. Analyse the alternatives 5. Select an alternative |
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What is Anthony's hierarchy?
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- Strategic planning: deciding on an organisations objectives
- Management control: The efficient and effective use of an organisation's resources - Operational control: Ensuring tasks are carried out efficiently and effectively |
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What is a Management Control System?
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Measures and corrects the performance of activities of subordinates in order to make sure that the objectives of the organisation are being met and the plans devised to attain them are begin carried out.
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What are the features of strategic information?
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- Derived from both internal and external sources
- Summarised - Relevant to long term - Deals with the whole organisation - Often prepared on a ad-hoc basis - Is both qualitative and quantitative |
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What are the features of tactical information?
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-It is internally generated
- Summarised at a low level (management) - Relevant to short-medium term - describes/analyses departments - Prepared regularly - quantitative - Allows monitoring against goals |
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What are the features of operational information?
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- Derived from internal sources
- Highly detailed - Relates to the immediate term - quantitative |
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What are the qualities of good information?
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- Relevance
- Completeness - Reliability - Clarity - Confidence - Communication - Volume - Timing - Channel of communication - Cost - Comparability |
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What are the main features of a report?
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- Title
- Who is the report intended for? - Who is the report from? - Date - Subject: Report Heading - Sub-headings - Appendix |
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What were the significant developments in management accounting?
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- Marginal Costing
- Separation of costs into fixed and variable |
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What management accounting techniques have developed?
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- Activity based costing
- Customer profitability analysis |
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What is a management accounting system?
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An information system that produces informaiton required by managers to manage resources and create value for customers and shareholders.
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What are the components of a management accounting system?
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- People with accounting knowledge
- Technology - Cost accounting system - Management accounting techniques - Reports - Users of information |
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What are the risks associated with management accounting systems?
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- Excessive emphasis on financial measures
- Internal Orientation: not focusing on external factors - Lack of goal congruence: doing what's best for their division and not the organisation - Lack of future perspective - Failure to adapt performance measures to changing circumstances |
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What are the risks of traditional management accounting mehtods?
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- Globalisation and increased competition
- Information technology changes - Changes in organisation structure - Increasing awareness of sustainability and environmental issues |
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What are the core parts of a management accounting system?
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- Information and timing
- Sources of input data - Processing involved - Response required |
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What is strategic management accounting?
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Relates to factors external to the entity, as well as non-financial information and internally-generated information.
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What are some examples of strategic information?
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- Competitors' Costs
- Financial effect of competitor response - Product profitability - Customer profitability - Pricing decisions - Value of market share - Capacity expansion - Brand values - Shareholder wealth - Cash flow |
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What is management control information?
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It is provided for budgeting and planning, monitoring and other decision-making purposes at a management control level within the organisation.
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What are some examples of management control information?
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- Profit forecasts
- Variance analysis reports - productivity statistics |
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What is operational control information?
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Information needed for the conduct of day-to-day implementation of plans.
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What are the WCM (World Class Manufacturing) techniques?
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- JIT: Producing stock when demanded
- Total quality management: Continuous improvement - Kaizen: a feature of TQM; Specified cost reduction through continuous improvement - Lean management: Elimination of waste and continuous improvement - Life cycle costing: Tracs and accumulates actual costs over the product life cycle - Target costing: Determine the price customers would be willing to pay for a product |
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What are the advantages and disadvantages of life cycle costing?
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Adv: Emphasises the importance of development and design costs and time to market
Dis: Estimating product life costs over a number of years |
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What are the advantages and disadvantages of Target costing?
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Adv: Brings market information into the MAS; Encourages continual product and production improvements; provides a structured approach for dealing with improvements
Dis: Setting a target as it is difficult to forecast a market price |
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What is organisational behaviour?
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The impact that individuals, groups and organisational structure have on behaviour within an organisation and on that organisation's effectiveness or ability to create value.
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What role can a management accountant create value?
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- providing relevant informaiton for planning and decision making
- Assisting management in direction and control activities - Motivating managers and other employees towards organisational objectives - Measuring the performance of the activities - Assessing the organisation's competitive position |
