differences between management dan accounting
1.1.
Identify and describe the different users of accounting information.
Accounting is a language that communicates economic information to people who have an
interest in an organisation – managers, shareholders, potential investors, employees, creditors
and the government.
For example, managers require information that will assist them in their decision-making and
control activities; sharholders require information on the value of their investment and the
income that is derived from their shareholding; Creditors require information on a firm‘s ability
to meet its financial obligations. Government agencies are collecting accounting
informationsuch as prifits, investments, dividends paid, or amount of profits that are subject to
taxation.
Non-profit maing organizations (churches, clubs, government units) require accounting
information for decision-making and reporting the results of their activities.
There are manu users of accounting. They can be devided into two categories:
1. Internal parties withn the organisation (management accounting), (internal reporting).
2. External parties outside the organisation (shareholders, creditors and regulatory agencies)
(financial accounting), (external reporting).
1.2.
Describe differences between management accounting and financial accounting.
Legal
requirements
Focus on
individual parts or
segments of
business
Generally
accepted
accounting
principles
Time dimension
Report frequency
1.3.
Financial accounting
There is a statutory requirement to
produce annual accounts
Reports describe the whole of the
business
Management accounting
Collecting of information is
optional
Focuses on small parts of the
organisation
Statements have to be prepared in
accordance with generally accepted
accounting principles
Statements are not required to
adhere to generally accepted
accounting principles
Financial accounting reports what has Management accounting is
happened in the past in an organisation concerned with future
information as well as past
information
A detailed set is published annually,
Management accounting reports
less detailed are published semion various activities may be
annually
prepared at daily, weekly or
monthly intervals
Explain each of the elements of the decision-making, planning and control
process.
1. Identify objectives
The first stage in the decision-making process should be to specify the
objectives of organisation. Mostly organisations seek to maximize future
profits. It can be and specific objectives like producing high-quality
products or being the market leader within a particular market segment.
2. Search for
It is the most difficult and important stage of decision-making process. It is
alternatives courses of very important to survive in the future so the managers should to identifie
action
potential opporunities and threats in current and future environment and to
take steps now so that the organisation will not be taken by surprise by any
developments that may occur in the future.The company should consider
one or more of the followingcourses of action:
1 developing new products for sale in existing markets;
2 developing new products for new markets;
3 developing new markets for existing products;
3. Select appropriate
Management should gather information that facilitates decision-making,
courses of action
for example information about potential growth rates of the alternative
activities that have been identified. The alternatives should be evaluated to
identify courses of action that best satisfy the objektives of an organisation.
4. Implement the
After selection of alternative courses of action they should be
decision
implemented. It is as part of the budgeting and long-term pricess. Budget is
the financial plan for implementing of decisions made by management. It
is expressed in terms of cash inflows and outtflows, sales revenues and
expensesMaster budget statement is organisation‘s expectations for futer
periods statement and it consists of budgeted profit and cash flow
statements.
5. Compare actual
It is important to control implementing of decisions. The accountant
and planned outcomes produces performance reports wich consist of a comparison of actual
outcomes (actual costs and ravenues) and planned outcomes (budgeted
costs and revenues). Such reports highlight those activities that do not
conform to plans.
6. Respond to
If the manager establish that actual outcomes do not conform to planed
divergences from plan outcomes it is necessarily to take corrective action so that actual outcomes
conform to planned outcomes. The plans may be modificated if the
comparisons indicate that the plans are no longer attainable. Process should
come back to the 2th stage from the 6th. The plans should be regulary
reviewed and if they are no longer attainable then alternative courses of
action must be considered for achieving the organisation‘s objectives.
1.4 Describe what is meant by management by exception.
If the manager establish that actual outcomes do not conform to planed outcomes it is necessarily to
take corrective action so that actual outcomes conform to planned outcomes. Performance reports
highlight those activities that do not conform to plans. Managers can devote their scarce time to
focusing mainly on these items. (The plans may be modificated if the comparisons indicate that the
plans are no longer attainable.)
1.5 What is a product‘s life cycle?
A product‘s life cycle is the period of time from initial expenditure on research and development to
the time at which support to customers is withdrawn.
Identify and describe the different users of accounting information.
Accounting is a language that communicates economic information to people who have an
interest in an organisation – managers, shareholders, potential investors, employees, creditors
and the government.
For example, managers require information that will assist them in their decision-making and
control activities; sharholders require information on the value of their investment and the
income that is derived from their shareholding; Creditors require information on a firm‘s ability
to meet its financial obligations. Government agencies are collecting accounting
informationsuch as prifits, investments, dividends paid, or amount of profits that are subject to
taxation.
Non-profit maing organizations (churches, clubs, government units) require accounting
information for decision-making and reporting the results of their activities.
There are manu users of accounting. They can be devided into two categories:
1. Internal parties withn the organisation (management accounting), (internal reporting).
2. External parties outside the organisation (shareholders, creditors and regulatory agencies)
(financial accounting), (external reporting).
1.2.
Describe differences between management accounting and financial accounting.
Legal
requirements
Focus on
individual parts or
segments of
business
Generally
accepted
accounting
principles
Time dimension
Report frequency
1.3.
Financial accounting
There is a statutory requirement to
produce annual accounts
Reports describe the whole of the
business
Management accounting
Collecting of information is
optional
Focuses on small parts of the
organisation
Statements have to be prepared in
accordance with generally accepted
accounting principles
Statements are not required to
adhere to generally accepted
accounting principles
Financial accounting reports what has Management accounting is
happened in the past in an organisation concerned with future
information as well as past
information
A detailed set is published annually,
Management accounting reports
less detailed are published semion various activities may be
annually
prepared at daily, weekly or
monthly intervals
Explain each of the elements of the decision-making, planning and control
process.
1. Identify objectives
The first stage in the decision-making process should be to specify the
objectives of organisation. Mostly organisations seek to maximize future
profits. It can be and specific objectives like producing high-quality
products or being the market leader within a particular market segment.
2. Search for
It is the most difficult and important stage of decision-making process. It is
alternatives courses of very important to survive in the future so the managers should to identifie
action
potential opporunities and threats in current and future environment and to
take steps now so that the organisation will not be taken by surprise by any
developments that may occur in the future.The company should consider
one or more of the followingcourses of action:
1 developing new products for sale in existing markets;
2 developing new products for new markets;
3 developing new markets for existing products;
3. Select appropriate
Management should gather information that facilitates decision-making,
courses of action
for example information about potential growth rates of the alternative
activities that have been identified. The alternatives should be evaluated to
identify courses of action that best satisfy the objektives of an organisation.
4. Implement the
After selection of alternative courses of action they should be
decision
implemented. It is as part of the budgeting and long-term pricess. Budget is
the financial plan for implementing of decisions made by management. It
is expressed in terms of cash inflows and outtflows, sales revenues and
expensesMaster budget statement is organisation‘s expectations for futer
periods statement and it consists of budgeted profit and cash flow
statements.
5. Compare actual
It is important to control implementing of decisions. The accountant
and planned outcomes produces performance reports wich consist of a comparison of actual
outcomes (actual costs and ravenues) and planned outcomes (budgeted
costs and revenues). Such reports highlight those activities that do not
conform to plans.
6. Respond to
If the manager establish that actual outcomes do not conform to planed
divergences from plan outcomes it is necessarily to take corrective action so that actual outcomes
conform to planned outcomes. The plans may be modificated if the
comparisons indicate that the plans are no longer attainable. Process should
come back to the 2th stage from the 6th. The plans should be regulary
reviewed and if they are no longer attainable then alternative courses of
action must be considered for achieving the organisation‘s objectives.
1.4 Describe what is meant by management by exception.
If the manager establish that actual outcomes do not conform to planed outcomes it is necessarily to
take corrective action so that actual outcomes conform to planned outcomes. Performance reports
highlight those activities that do not conform to plans. Managers can devote their scarce time to
focusing mainly on these items. (The plans may be modificated if the comparisons indicate that the
plans are no longer attainable.)
1.5 What is a product‘s life cycle?
A product‘s life cycle is the period of time from initial expenditure on research and development to
the time at which support to customers is withdrawn.