Accounting & auditingLesson 1 of 3 in the course Managerial and cost accounting

Management Accounting: Roles, Costing Methods, and Decision Tools

5 flashcards · 5 quiz questions · 5 match pairs · 3 fill-in sentences · English

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Summary

Management accounting turns financial and operational information into useful guidance for people managing an organization. This lesson explains what the discipline does, who uses its information, and how its scope differs from financial accounting.

Management accounting is the provision of financial and non-financial information to managers to support decision-making, planning, and control. It involves identifying, analyzing, interpreting, and communicating information so leaders can work toward organizational goals.

All flashcards

What is management accounting?
It is the provision and communication of financial and non-financial information to managers so they can plan, make decisions, control operations, and pursue organizational goals.
What does it mean to call management accountants value-creators?
They use analysis and information to influence choices that can improve future organizational performance, rather than focusing only on recording past events.
What are the three broad areas of management accounting practice identified by the AICPA?
Strategic management, performance management, and risk management.
How does management accounting differ in time orientation from financial accounting?
Management accounting is primarily forward-looking and supports future decisions; financial accounting is primarily historical and reports past financial activity.
Why is management accounting information often more detailed than financial accounting information?
Managers need information broken down by products, activities, divisions, plants, operations, or tasks to plan and control specific parts of the organization.

Quiz questions

  1. What does variance analysis compare?Answer: Actual costs with budgeted costs.
  2. How does activity-based costing typically assign indirect costs?Answer: By using measures related to the activities that consume resources.
  3. When can product design choices have especially strong influence on manufacturing costs?Answer: Before production begins, while the product is still being designed.
  4. What does throughput accounting help managers assess when a resource constrains output?Answer: Contribution generated in relation to use of the constrained resource.
  5. In banking, what can transfer pricing assign to business units that use funding to make loans?Answer: Funding charges that attribute resource use and interest-rate risk.

Based on the Wikipedia article Management accounting, licensed CC BY-SA 4.0. Adapted into a summary, flashcards and quizzes.

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