Unit 1 Chapter 1

Question 1

Management accounting

Answer 1

concerned with providing information to managers – that is, people inside an organization who direct and control its operations
provides the essential data with which organizations are actually run

Question 2

Financial accounting

Answer 2

concerned with providing information to shareholders, creditors and others who are outside an organization.
provides the scorecard by which a company’s past performance is judged.

Question 3

Activities carried out by managers

Answer 3

Planning
Directing and motivating
Controlling
Decision making

Question 4

Planning

Answer 4

selecting a course of action and specifying how the action will be implemented
Includes budgeting

Question 5

Directing and motivating

Answer 5

mobilizing people to carry out plans and run routine operations
assign
tasks to employees, arbitrate disputes, answer questions, solve on-the-spot problems, and make many small decisions that affect customers and employees.

Question 6

Controlling

Answer 6

ensuring that the plan is actually carried out and is appropriately modified as circumstances change
Feedback is important
Performance reports

Question 7

Performance report

Answer 7

suggest where operations are not proceeding as planned and where some parts of the organization may require additional attention

Question 8

Decision making

Answer 8

selecting a course of action from competing
alternatives.
What should we be selling?
Who should we be serving?
How should we execute?

Question 9

Planning and control cycle

Answer 9

1. Formulating long- and short-term plans (Planning)
2. Implementing plans (Directing and motivating)
3. Measuring performance (Controlling)
4. Comparing actual to planned performance (Controlling)

Decision making is involved in all these activities

Question 10

Characteristics of financial manager

Answer 10

Reports to the OUTSIDE the organization
Emphasis on PAST summaries of financial consequences
Objectivity and verifiability emphasized
PRECISION of information is required
Focuses on the organization as a WHOLE
IFRS is compulsory
External reports are compulsory
uses absorption costing

Question 11

Characteristics of management accountant

Answer 11

Reports to those INSIDE the company
Emphasis on decisions affecting the FUTURE
Relevance and flexibility is emphasized
TIMELINESS of information is required
focuses on the organizations in segments
IFRS is not compulsory
External reports are not compulsory
use variable cost

Question 12

Factors of expanding/changing role management accounting

Answer 12

Increased size
Increased complexity
Increased emphasis on quality
Rapid development and technology
Worldwide competition
Regulatory environment

Question 13

Implications of increased global competition

Answer 13

Meeting world-class competition, demands a world-class management accounting system
Managers must make decisions, plan, direct and control a world class organisation

Question 14

Importance of service sector management

Answer 14

It helps to wipe out the problem of regional imbalances and disparities within the country.

Question 15

Corporate governance

Answer 15

the system by which companies are directed and controlled