Management accounting
Chapter 1 – introduction to management accounting
The purpose of business is to create and keep a customer.
Limited companies = the finance will come from the owners (shareholders) in
direct cash and shares.
Finance will also come from lenders and from suppliers of goods and services.
Three major tasks of the board:
1. Setting the overall direction and strategy for the business
2. Monitoring and controlling the activities of the business
3. Communicating with shareholders and others connected with the business
Chairman = responsible for running the board in an efficient manner.
CEO = responsible for running the business on a day-to-day basis.
Separate them to prevent a single individual having the power.
Board of directors
Finance Personnel Marketing Operations
Managing cash Coach drivers’ Advertising, Repair maintenance
flows, borrowing, routes, schedules, maintaining of coaches, buying
funds, payment of staff duties, and relationships, spares, giving
wages and salaries, problems. entering contact advice to replace
billing and collecting old coaches.
charges, invoices
and paying out
voices.
Managing large businesses through a group of divisions can be a very effective
approach.
Business became turbulent and competitive because:
Sophistication of customers
Global economy
Technology
Pressure for competitive economic returns
Unpredictability of financial markets
Strategic management = provide a business with a clear sense of purpose and
to ensure that appropriate action is taken to achieve that purpose. This action
should link the internal resources to the external environment of competitors,
suppliers and customers.
Strength, weaknesses, opportunities and treats
Mission statement = concise statement of the overall aims/intentions of the
business.
Customer focussed & identify business activities (values/beliefs)
In annual reports
Then make objectives clear targets/outcomes, which are challenging and
achievable and a basis to measure actual performance.
, Position analysis = the business is seeking to establish how it is placed relative
to its environment (customers, competitors, suppliers, technology, the economy)
in the context of its mission and objectives.
Which is often approached with a SWOT analysis.
Strength & weaknesses = internal
Opportunities & threats = external
Select
Select
Identify and
Establish
Establish Undertake
Undertake aa strategic
strategic Perform,
Perform,
asses
asses the
the
mission and position options and review and
strategic
strategic
objectives
objectives analysis
analysis formulate
formulate control
control
options
options plans
plans
Changing business landscape:
Growth service sector
New industries
E-commerce
Automated manufacturing
Production innovation
Response times
Led to challenges for management accountant
Satisfying the needs of other groups will normally be consistent with increasing
the wealth for the owners over the longer term.
Generating wealth for the owners is NOT the same as seeking to maximise
current years profit but to future years profit as well.
Key financial objective = maximisation for the shareholders wealth.
Management accounting = collecting and analysing financial information and
then communicating this information to those making decisions provide
economic information to the managers.
For whom and what purpose
Accounting information should help in identifying and assessing the financial
consequences of decisions such as: develop new products, increase/decrease
price or quantity, borrowing money, choosing methods.
Key qualities/characteristics of management accounting:
Relevance = information should be timely (on time)
Reliability = free from errors
Comparability = compare to other companies to evaluate performance
Understandability = understood by those whom the information is aimed
Materiality = the information should be regarded as material and the type of
information and amounts involved will determine if it is material.
Broken line = the optimal amount of information that can be provided.
Chapter 1 – introduction to management accounting
The purpose of business is to create and keep a customer.
Limited companies = the finance will come from the owners (shareholders) in
direct cash and shares.
Finance will also come from lenders and from suppliers of goods and services.
Three major tasks of the board:
1. Setting the overall direction and strategy for the business
2. Monitoring and controlling the activities of the business
3. Communicating with shareholders and others connected with the business
Chairman = responsible for running the board in an efficient manner.
CEO = responsible for running the business on a day-to-day basis.
Separate them to prevent a single individual having the power.
Board of directors
Finance Personnel Marketing Operations
Managing cash Coach drivers’ Advertising, Repair maintenance
flows, borrowing, routes, schedules, maintaining of coaches, buying
funds, payment of staff duties, and relationships, spares, giving
wages and salaries, problems. entering contact advice to replace
billing and collecting old coaches.
charges, invoices
and paying out
voices.
Managing large businesses through a group of divisions can be a very effective
approach.
Business became turbulent and competitive because:
Sophistication of customers
Global economy
Technology
Pressure for competitive economic returns
Unpredictability of financial markets
Strategic management = provide a business with a clear sense of purpose and
to ensure that appropriate action is taken to achieve that purpose. This action
should link the internal resources to the external environment of competitors,
suppliers and customers.
Strength, weaknesses, opportunities and treats
Mission statement = concise statement of the overall aims/intentions of the
business.
Customer focussed & identify business activities (values/beliefs)
In annual reports
Then make objectives clear targets/outcomes, which are challenging and
achievable and a basis to measure actual performance.
, Position analysis = the business is seeking to establish how it is placed relative
to its environment (customers, competitors, suppliers, technology, the economy)
in the context of its mission and objectives.
Which is often approached with a SWOT analysis.
Strength & weaknesses = internal
Opportunities & threats = external
Select
Select
Identify and
Establish
Establish Undertake
Undertake aa strategic
strategic Perform,
Perform,
asses
asses the
the
mission and position options and review and
strategic
strategic
objectives
objectives analysis
analysis formulate
formulate control
control
options
options plans
plans
Changing business landscape:
Growth service sector
New industries
E-commerce
Automated manufacturing
Production innovation
Response times
Led to challenges for management accountant
Satisfying the needs of other groups will normally be consistent with increasing
the wealth for the owners over the longer term.
Generating wealth for the owners is NOT the same as seeking to maximise
current years profit but to future years profit as well.
Key financial objective = maximisation for the shareholders wealth.
Management accounting = collecting and analysing financial information and
then communicating this information to those making decisions provide
economic information to the managers.
For whom and what purpose
Accounting information should help in identifying and assessing the financial
consequences of decisions such as: develop new products, increase/decrease
price or quantity, borrowing money, choosing methods.
Key qualities/characteristics of management accounting:
Relevance = information should be timely (on time)
Reliability = free from errors
Comparability = compare to other companies to evaluate performance
Understandability = understood by those whom the information is aimed
Materiality = the information should be regarded as material and the type of
information and amounts involved will determine if it is material.
Broken line = the optimal amount of information that can be provided.
