qualitative aspects of management accounting.

theory parts to management accounting.

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L 9:
I
ntr
odu ct
ion
to
ma n ag eme nt
accounti
ng
1.L ist
and expla in t
he 5 f
unc t
ions
of man agement.
a .P lanning
I nf
orma ti
on i
s r
equ i
red t
o help
de t
ermine the fut
ure di
rect
ion
& a ct
ions
o f
any or ga ni
za ti
on ,
i
n cl
udi
n g t
he ul
ti
ma t
e
go al
.
A ccou nt i
ng
w i
ll
hel
p
to pr
ov i
de i
nformati
on
ab out
t
he resour
ces
w hi
ch are
curr
en t
ly
ava il
able.
b .O r
gan i
zi
n g
c .C ont
rol
li
n g
P urpo se :
ens ure
that
the business
is
proc eed i
ng accor
ding
to
the
plan.
d .C ommu n ica t
ing
e .Mo t
ivat
ing .
2.I denti
fy
the
d i
fferenc es between f
inan ci
al
& man a ge me nt
accounti
ng.
Fi
nanci
al
account
ing Management
account
ing
Pur
pose Mai
nly
for
ext
ernal
use I
nter
nal
use
Fr
eedom
of
choi
ce Subj
e ct
t
o account
ing No const
rai
nt
except
r
ules bal
ance of
cost
&
benef
it
Ori
ent
ati
on hi
stor
ical
Fut
ure
emphasi
s Busi
ness
as
a whol
e Focus
on parts
as
w el
l
as
on
the
w hol
e
accur
acy
absol
ute appr
oxi
mat
e
3.Expl
ain
the
obj
ecti
ves
of
manageme nt
account
ing.
P rovi
des
accur
ate
cost
s of
pr
oducts
&
servi
c es.

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C ost
accoun t
ing.
P rovi
des i
nformati
o n f
or
ma ki
n g
de ci
si
o ns.
D ecisi
ons may be
about acq ui
ri ng
&
fi
na nci
ng pr
oduct
capaci
ty,
making
cap i
tal
i
nv est
me nt
s.…read more

Page 3

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Expl
ain
absorpt
ion c os t
ing
&
ma r
g i
nal
cost i
ng methods.
a.A bsor
pti
on cost
i n g
A l
l
ma nuf a cturing
costs
a r
e abso r
b ed
by t
he p r
od uct.
B oth
v a riable &
fi
xed
fact
ory costs
are
treated
as p art
of pr
oduct
cost.…read more

Page 4

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Stock
val
uati
on s bal
ance
sheet
val
ue
of
net
asset
s i
s l
ower
wi
th
MC
t
han f
ull
cost
ing.
L 11:
CVP
analysi
s &
relevant
cost
for
decisi
on maki
n g.
1.L i
mit
ati
o ns
of
C VP anal
ysis
A ssump t
ions mad e
are unr
eali
sti
c.…read more

Page 5

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NPV Net
ti
ng t
he PV
o f
i
nvest
me nt
's
cash
inf
lows
agai
nst
t
he
P V
of
cash out
fl
ows.
5 I
R R Di
scount
r
ate
that
'l
l
have
the
eff
ect
of
pr
oduci
ng
an
NPV
of
zero
(0)
2.E xpl
ain
advant
ages
& di
sadvant
ages
of
payback
per
iod,
ARR,
N PV,
I
R R.…read more

Page 6

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Easy
to
comp ar
e I
R R
of
di
ff
erent
pr
oject
s
L 14:
Bu dgeti
ng
1 .D isc uss t
he p u r
p oses ,
a d va ntage s & li
mi ta ti on s
o f
bud get
ing .
a .…read more

Page 7

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I
dent
if
y ways
w her
e wor
king
capi
tal
management
can
impr
ove
cash
posi
ti
on.
5.Expl
ain
impo rt
ance of
w or
king
capit
al
ma nageme nt
t o a
business.
I f
t
oo
mu ch i
s i
nve st
ed i
n worki
ng capi
tal
,
there
w on 't
be
e nough cash t
o
i
n vest
i
n:
a.N ew proj
ects.
b.…read more

Page 8

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Sal
es
volume
vari
ance
Fl
exi
ble
budget
var
iance…read more

Page 9

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Expl
ain
the
reasons f
o r f
a vourable &
adverse
va r
iances.
a.R easons
for
advers e v ar
iances
S al
e s
volume :
P oor
per fo r
ma nce by sal
es dep artme nt
D eter
iora tion i
n marke t
condit
io ns
L ack
of
a v ailabi
li
ty
of stock
to se l
l
.…read more

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