Financial management accounts sem 1

Purpose of management accounting

Promotes decision making, plann

ing and controlling of mainly internal users

What is

Management Accounting?

The application of the principles of accounting and financial management to create, preserve, protect and increase the value of stakeholders in profit and non-profit organisations as well as in private and public sectors.

Global Management Accounting Principles (GMAP) emphasize effective communication, relevant information, analyzing impact on value, and building trust through stewardship.

What are Global Management Accounting Principles (GMAP)?

Data refers to raw facts and figures, while information is processed data that is useful for decision-making.

What is the difference between data and information?

A – Accurate, C – Complete, C – Cost-effective, U – Understandable, R – Relevant, A – Authoritative, T – Timely, E – Easy to use.

What does the acronym ACCURATE stand for in good information characteristics?

1. Strategic Decisions - Long-term, for senior management; 2. Tactical Decisions - Medium-term, for middle management; 3. Operational Decisions - Day-to-day, for junior management.

What are the three levels of decision-making in Management Accounting?

Planning involves setting objectives and strategies, often using SMART objectives: Specific, Measurable, Achievable, Relevant, Timed.

What is the purpose of Planning in Management Accounting?

1. Strategic Planning - Long-term (5+ years) for the whole organization; 2. Tactical Planning - Short to medium term, breaking strategy into departmental plans; 3. Operational Planning - Day-to-day planning of routine activities.

What are the three levels of Planning in Management Accounting?

The role includes budgeting, cost management, performance evaluation, and decision support for planning and control.

What is the role of a Management Accountant?

Financial Accounting focuses on external users and historical data, while Management Accounting is aimed at internal users, is future-oriented, and is more flexible.

How does Financial Accounting differ from Management Accounting?

Feedback refers to information about actual performance used for control, comparing actual results with plans and taking corrective action.

What is Feedback in the context of Management Accounting?