1- Intro to Management Accounting

Question 1

Stages of the Management Cycle

[4]

Answer 1

Formulating Long and Short-Term Plans
(Planning)
Implementing the Plans
(Directing and Motivating)
Measuring  Performance
(Controlling)
Comparing Actual to Planned Performance
(Controlling)

Question 2

What is Management accounting? def

Answer 2

“The process of identification, measurement,
accumulation, analysis, preparation,
interpretation and communication of information
used by management to plan, evaluate and
control within an entity and to assure
appropriate use of and accountability for its
resources.”
(CIMA Official Terminology)

Question 3

Managerial accounting
provides information
for …

Answer 3

… managers of an
organisation who
direct and control
its operations

Question 4

Characteristics of Useful Information

Answer 4

• Accurate
• Relevant
• Timely
• Understandable
• Comparable
• Complete

Question 5

Information provision should ultimately be
aimed at achieving organisational _____
but… x3

Answer 5

Objectives

Objectives may conflict
Objectives poorly defined
Objectives may change over time

Question 6

What is financial accounting? It provides…

Answer 6

Financial accounting
provides information
to stockholders,
creditors and others
who are outside
the organisation

Question 7

Similarities between financial and management accounting? x3

Answer 7

Both predominately quantitative
• Share certain data sources
• Both are key elements of the MIS

Question 8

DIFFERENCES between financial and management accounting x6

Answer 8

Financial Management
Accounting Accounting
1. Users: External persons who Managers who plan for
make financial decisions and control an organisation
2. Time focus: Historical perspective Future emphasis
3. Verifiability: Emphasis on Emphasis on relevance
versus relevance verifiability for planning and control
4. Precision: versus Emphasis on Emphasis on
timeliness precision timeliness
5. Subject: Primary focus is on Focuses on segments
the whole organisation of an organisation
6. Requirements: Must follow prescribed Need not follow IFRS
formats (e.g.IFRS) or any prescribed format

Question 9

Factors increasing the need for management accounting? x5

Answer 9

Increasing complexity and size of organizations
Regulatory environment
World-wide competition
Rapid development and implementation of technology
Increased emphasis on quality

Question 10

CIMA Code of Ethics for Management

Accountants x4

Answer 10

Fairness
Thruthful
Straight forward
Honest