Introduction to Management Accounting
Revision questions with correct answers
2024
What is Management accounting? - Correct Answers"The process of identification,
measurement, accumulation, analysis, preparation, interpretation and communication of
information used by management to plan, evaluate and control within an entity and to
assure appropriate use of and accountability for its resources."
What is Financial accounting? - Correct AnswersFinancial accounting provides
information to shareholders, creditors and others who are outside the organization.
What is the role of management accounting? - Correct Answers1. Developing plans and
analysing alternatives.
2. Communicating plans to key personnel.
3. Evaluating performance.
4. Reporting the results of activities.
5. Accumulating, maintaining, and processing an organisation's financial and non-
financial information.
Characteristics of useful info. - Correct Answersrelevance
understandability
timeliness
comparability
reliability
completeness
info used for organisational objectives however what problems can occur? - Correct
AnswersObjective(s) may be poorly defined
there may be several objectives in conflict
objectives could change over time.
Explain the cost/benefit criterion. - Correct AnswersCost of obtaining information should
not outweigh the benefit of possessing it.
Similarities between two types of accounting? - Correct AnswersBoth predominately
quantitative
Share certain data sources
Both are key elements of the MIS
Differences between two types of accounting?
(financial - managing) - Correct AnswersDecision: external person financial decisions -
managers plan for and control organisation.
, Time focus: Historical perspective - future emphasis.
Emphasis: verifiability and precision - relevance for planning and control.
Frequency: prepared on regular basis - on ad hoc basis.
Focus: primary focus on whole organisation - focus on segments of organisation.
Format: must follow GAAP and prescribed formats - flexible based on users' needs.
Factors that increase the need for management accounting info - Correct
AnswersIncreasing complexity of org
Regulatory environment
World-wide competition
Rapid development and implementation of tech
Increase emphasis on quality
New tools for managers - Correct AnswersJust-In-Time
Total Quality Management
Process Reengineering
Theory of Constraints
Ethics in accounting - Correct AnswersEthical accounting practices build trust and
promote loyal, productive relationships with users of accounting information.
Many companies and professional organizations, such as the Chartered Institute of
Management Accountants (CIMA), have written codes of ethics which serve as guides
for employees.
Code of ethics for management accountants - Correct AnswersAvoid activities that
could affect your ability to perform duties
Refrain from activities that could discredit the profession
Communicate unfavourable as well as favourable info
Refuse gifts or favours that might influence behaviour
Lecture 2 - Correct Answers
What is Cost Clarification? - Correct AnswersCost clarification is essentially a matter of
grouping together costs which share the same attribute(s) relative to a stated cost
objective.
Note:
The cost objective should determine the classification to be used.
Changing the cost objective may alter the categorisation of a specific cost within a given
classification.
Revision questions with correct answers
2024
What is Management accounting? - Correct Answers"The process of identification,
measurement, accumulation, analysis, preparation, interpretation and communication of
information used by management to plan, evaluate and control within an entity and to
assure appropriate use of and accountability for its resources."
What is Financial accounting? - Correct AnswersFinancial accounting provides
information to shareholders, creditors and others who are outside the organization.
What is the role of management accounting? - Correct Answers1. Developing plans and
analysing alternatives.
2. Communicating plans to key personnel.
3. Evaluating performance.
4. Reporting the results of activities.
5. Accumulating, maintaining, and processing an organisation's financial and non-
financial information.
Characteristics of useful info. - Correct Answersrelevance
understandability
timeliness
comparability
reliability
completeness
info used for organisational objectives however what problems can occur? - Correct
AnswersObjective(s) may be poorly defined
there may be several objectives in conflict
objectives could change over time.
Explain the cost/benefit criterion. - Correct AnswersCost of obtaining information should
not outweigh the benefit of possessing it.
Similarities between two types of accounting? - Correct AnswersBoth predominately
quantitative
Share certain data sources
Both are key elements of the MIS
Differences between two types of accounting?
(financial - managing) - Correct AnswersDecision: external person financial decisions -
managers plan for and control organisation.
, Time focus: Historical perspective - future emphasis.
Emphasis: verifiability and precision - relevance for planning and control.
Frequency: prepared on regular basis - on ad hoc basis.
Focus: primary focus on whole organisation - focus on segments of organisation.
Format: must follow GAAP and prescribed formats - flexible based on users' needs.
Factors that increase the need for management accounting info - Correct
AnswersIncreasing complexity of org
Regulatory environment
World-wide competition
Rapid development and implementation of tech
Increase emphasis on quality
New tools for managers - Correct AnswersJust-In-Time
Total Quality Management
Process Reengineering
Theory of Constraints
Ethics in accounting - Correct AnswersEthical accounting practices build trust and
promote loyal, productive relationships with users of accounting information.
Many companies and professional organizations, such as the Chartered Institute of
Management Accountants (CIMA), have written codes of ethics which serve as guides
for employees.
Code of ethics for management accountants - Correct AnswersAvoid activities that
could affect your ability to perform duties
Refrain from activities that could discredit the profession
Communicate unfavourable as well as favourable info
Refuse gifts or favours that might influence behaviour
Lecture 2 - Correct Answers
What is Cost Clarification? - Correct AnswersCost clarification is essentially a matter of
grouping together costs which share the same attribute(s) relative to a stated cost
objective.
Note:
The cost objective should determine the classification to be used.
Changing the cost objective may alter the categorisation of a specific cost within a given
classification.
