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301 > Week 1 Management Accounting > Flashcards

Week 1 Management Accounting Flashcards

1
Q

What is management accounting?

A

process and techniques that focus on effective and efficient use of org resources to support managers in their task of enhancing both customer + shareholder value
- generate info for internal managers to make decisions

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2
Q

Management accting: customer value?

A

value customer places on particular features of product or service

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3
Q

Management accting: shareholder value

A

value shareholders or owners place on business

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4
Q

Management accting: resources?

A

financial and non-financial

organisation capabilities and competencies

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5
Q

what are the 4 difference areas for management vs financial accting?

A
  • users of info
  • regulations
  • source of data
  • nature of info
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6
Q

Management accounting vs financial accounting:

Users of Info

A

M - Internal: managers and employees at all level

F - External: shareholders, creditors, banks, securities exchange, trade unions and gov agencies

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7
Q

Management accounting vs financial accounting

Regulations

A

M -No accting standards or external rules imposed. info generated to satisfy managers needs

F - accting standards and corporation law regulate content of external financial reports

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8
Q

Management accounting vs financial accounting

Source of data?

A

M - Both financial and non-financial data from many sources - core accting system, operational data from production system, market, customer and economic data from sources external to org

F - data from org’s core transaction-based accting system

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9
Q

Management accounting vs financial accounting

Nature of info?

A

M - past, current and future oriented; subjective; relevant; timely; and supplied at various levels to meet manager’s needs

F - Past; reliable; verifiable; not timely; not always relevant; and highly aggregated

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10
Q

Management accountants within organisations:

what do most large org have at corporate level?

A

finance function

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11
Q

Management accountants within organisations

accting staff can operate in which 2 divisions/level?

A

operating division and corporate level

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12
Q

what is vision?

A

The desired future state or aspiration of an organisation
Used by senior managers
- e.g., Microsoft: “Empower people through great software
anytime, anyplace, and on any device.”

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13
Q

what is mission statement?

A

Defines the purpose and boundaries of the organisation

  • e.g., Nissan: “Nissan provides unique and innovative automotive products and services that deliver superior, measurable values to all stakeholders.”
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14
Q

what are objectives/goals?

A
  • The specific aims of the organisation
  • Often quantified
  • Relates to a specific period of time
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15
Q

what is strategy? focal point?

A

a “game plan” that enables a company to attract customers by distinguishing self from competitors
focal point = customers

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16
Q

what are the 3 hierarchy of strategy?

A
  • corporate strategy (corporate headquarter)
  • business - division level - strategy (strategic business unit)
  • Functional strategy (manufacturing, finance, HR)
17
Q

what decision made at corporate level strategy?

A

in what business we operate - deals with entire org inc different business unit

18
Q

decision made at business level?

A

how should we compete in that business? deals with partic business unit

19
Q

decision at strategy implementation level

A

what system/structure should be in place to support strategies

20
Q

what is involved at corporate strategy?

A
  • Choices about the types of businesses to operate
  • how best to structure and finance the organisation
  • In publicly listed companies, the choice of corporate strategy is influenced by the expectations of major shareholders and securities market
21
Q

what is involved at business (or competitive) strategy?

A
  • The way a business competes within its chosen market

* Distinct business strategies for each business unit

22
Q

what is competitive advantage?

A

Advantages of one business over another that are difficult to imitate, achieved by cost leadership and product differentiation

23
Q

what is cost leadership?

A 
sell products and services at lower prices.
― Economies of production
― Superior process technologies 
― Tight cost control
E.G., Toyota cars
24
Q

what is product differentiation?

A 
Offer different products/services In quality, delivery, operation, etc.
― Superior quality
― customer service
― delivery performance
― product features
E.G., BMW cars
25
Q

what is involved in Strategy implementation?

A
  • Planning and managing the implementation of strategy •New structures
  • New systems
  • New production processes
  • New marketing approaches
  • New human resource management policies
26
Q

what is planning?

A
  1. setting goal/objectives
  2. deciding how to attain goals
  3. predicting results

broad concept concerned with formulating direction for future operations

27
Q

what is control?

A

budgeted results actual results

gathers feedback to ensure plans are being followed and whether it is having desired effect/outcome

28
Q

what is the Association between Strategy, Planning and Control?

A
  1. formulation of org objectives (vision + mission statement)
  2. formulate strategies
  3. planning to support strategy
  4. control system - implement plan/design
  5. control - manager evaluate performance agst plan and take corrective actions
  6. revision of plans -> planning
29
Q

Considerations in the design of management accounting systems?

A

behavioural issues

  • info can impact individual’s behaviours, so management accting system may have expected and unexpected outcomes
  • key purpose of management accting system is to motivate managers and employees to direct their efforts toward achieving goals
30
Q

what are the costs of generating and providing management accounting information

A
  • Salary of accounting personnel
  • Purchasing and operating computers
  • Gathering, storing and processing data
  • Managers’ time to read, understand and use the information
31
Q

what are the benefits of generating and providing management accounting information

A
  • Improved management decisions
  • More effective planning
  • Improved operational efficiency at lower cost
  • Better control
  • Improved customer and shareholder value
32
Q

what is contingency theory?

A

–The design of a management accounting system is influenced by specific aspects of the organisation’s context and a range of other factors;
e.g., technology, national culture, firm size

33
Q

what is Institutional theory?

A

–The design is influenced by institutional forces, which
explain similarities
e.g., ABC costing. Balanced scorecard

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