Solution Manual for Financial Accounting for Managers

Solution Manual for Financial Accounting for Managers
1st Edition By Thomas, Spiceland, Nelson



What is accounting? - ANSWER: -the process of identifying, measuring and
communicating economic/financial information to permit informed judgements and
decisions by users of the information
Examples of decisions:
1)Formulating organisational strategies and long-range plans
2)Resource allocation decisions
3)Cost planning and cost control of operations and activities
4)Performance measurement and evaluation of people
5)Meeting external regulatory and legal reporting requirements

Financial Accounting vs Management Accounting - ANSWER: -external vs internal
users
-generalised vs specialised info
-historical vs future perspective
-rules-based vs customised reports
-different overall functions

External vs Internal Users - ANSWER: -financial accounting is meant for those
external to the organisation, who need to get a view inside:
>investors (shareholders, owners)
>creditors
>tax authorities and other regulators
>suppliers and customers
>employees and unions

-management accounting is meant for those internal to the organisation, who need
info to achieve organisational goals
>CEO
>General Managers
>Department/Division Managers
>Functional Staff

Generalised vs Specialised info - ANSWER: Financial accounting uses the same
financial statements, to meet the needs of a wide variety of users. Info published in
financial reports is generalised and aggregated and always follows a similar format.
Management accounting reports are normally produced to meet the needs of a
specific decision maker(management). Thus, the reports are normally private and
specialised, with a level of detail to make a specific decision

, What does Financial Accounting provide info about? - ANSWER: -the financial
position, that is things an organisation owns and owes
-the financial performance, that is profit the organisation is making

What are management accountants responsible for? - ANSWER: -determining the
relevant information
-collecting the information
-communicating the information
-incentives to achieve objectives
-monitoring achievement of objectives and highlighting any cause for concern

>they are responsible for making decisions based on information provided

Historical vs Future Perspective - ANSWER: -financial accounting is based on
historical transactions
-for transactions to be recorded within a financial accounting system they must have
been based on past events
-financial accounting is primarily historical

-management accounting while still sometimes using historical data, is meant to be
used for decision making for the future
-many management accounting reports have future orientated data within them, for
example within budgets
-it is far more forward-looking

Rule-based vs Customised Reports - ANSWER: -financial accounting transactions and
reports follow specific standards i.e. IFRS or US GAAP
-financial accounting reports emphasise reliability (over relevance) and allow
transparency and comparability across organisation at a national or international
level

-management accounting reports are not subject to accounting rules, they are
customised to specific situations and can take any form
-emphasise relevance over reliability

FA vs MA - ANSWER: Nature of the reports produced: General-purpose vs Specific
purpose(often)
Level of detail: Broad overview vs Considerable detail
Regulations: subject to accounting regulations vs no specific regulation
Reporting interval: annual basis (often) vs as frequently as required
Time horizon: backward looking vs backward + forward looking
Range and quality of information: financial information vs financial + non-financial
information

Overall Functions - ANSWER: FA: decision-making, contracting and stewardship
MA: decision-making and control