Lecture 1 - What Is Managment Accounting? Flashcards
What two main characteristics does useful accounting information have?
Relevance
Reliability
What Elemis fall under ‘Relevance’?
- Timeliness
- Predictive value
- Feedback Value
- Consistency
What elements fall under ‘Reliability’?
- Verifiability
- Neutrality
- Faithful representation
- Completeness
- Consistency
What is the issue with providing a lot of accounting information?
This information costs a lot of money.
At some point the value of the extra information provided is less than the cost of attaining the information.
Theoretically, there is an optimum level of information.
What are the 4 stages in the accounting information system for management accounting?
1) Information identification
2) Information recording
3) Information analysis
4) Information reporting
In order to have information in a timely manner, what may have to be sacrificed?
Reliability may have to be sacrificed
What are the first 2 stages of the management accounting information system concerned with?
Preparation of information
What are the second two stages of the management accounting information system concerned with?
The Usage of information
What is the difference between ‘Managerial’ and ‘Financial’ accounting?
Managerial = Produce Financial statements for internal parties.
Financial = Produce Financial Statements for external parties.
What sort of things are influenced by the analysis of management accounting?
Selling price, Costs, competitive positions, profitability of products/services
What has happened to the product life-cycle in recent times?
It has decreased
Management accounting is better than financial accounting when making decisions…
Day to day
To aid decision makers, management accounting should provide…
Meaningful and useful information
In theory, there is a ……. between relevance and reliability
Trade-off
What happens to the ‘Marginal Value’ of information as more is provided?
It starts to level off and ultimately decreases
