Management Accounting vs. Financial Management

What is the primary definition of Management Accounting?

Accounting info used by managers for planning and control.

Who are the exclusive users of Management Accounting info?

Internal users (Company managers).

What is the time orientation of Management Accounting?

Future-oriented using past and present data.

Is Management Accounting a legal requirement?

No

What is the main focus of Management Accounting reports?

Business segments.

Which accounting branch is a subset of both Management and Financial?

Cost Accounting.

Define the 'Planning' function of management.

Setting goals and figuring out how to achieve them.

Define the 'Organizing' function of management.

Deciding how to use resources to put plans into action.

Define the 'Controlling' function of management.

Deciding on corrective actions for variances.

What is the primary role of a Controller?

Chief management accounting executive.

What is a 'Line' function in an organization?

The authority to give orders to subordinates.

What is a 'Staff' function in an organization?

The authority to advise but not to command others.

The Controller primarily exercises which type of function?

Staff function.

What is the primary function of a Treasurer?

Custody of funds and provision of capital.

Which officer is responsible for 'Protection of Assets'?

The Controller.

Which officer handles 'Banking and Custody'?

The Treasurer.

What is Financial Management concerned with?

Corporate investment and financing decisions.

What is the primary goal of Financial Management?

To maximize shareholders' wealth.

Why is Profit Maximization not the primary goal?

It ignores risk and the timing of cash flows.

What does the 'Risk-return trade-off' principle state?

Additional risk requires additional expected return.

What does 'Time Value of Money' mean?

A peso today is worth more than a peso in the future.

What are 'Incremental Cash Flows'?

The change in cash flows that counts.

Who oversees the work of the Treasurer and Controller?

The Chief Financial Officer (CFO).

Which accounting type emphasizes 'Reliability'?

Financial Accounting.

Which accounting type emphasizes 'Relevance'?

Management Accounting.

Is there a unifying equation for Management Accounting?

No unifying model or equation.

What is a characteristic of management accounting reports?

Detailed and extensive

What are the four sequential steps of management control?

Standards, Measuring, Comparing, Corrective Action.

What are the three basic management functions?

Planning, Organizing, and Controlling.