MANAGEMENT ACCOUNTING
NOVEMBER 2019
MEMORANDUM
PREPARED BY: MTHOMBENI
0767297208
, QUESTION 1
1.1 A branch of accounting that provides financial information for internal use by
management. It is concerned with financial information that is useful to the
management
1.2 A branch of accounting that deals with summary, analysis and reporting of
financial transactions related to a business
1.3
Management accounting serves the following functions:
It provides information for managers that enable them to make better and
informed decisions. Management requires a steady flow of information to
respond to possible problems that may be starting to develop or to be
proactive in ensuring that certain problems do not occur. This information
could be in the form of reports, spreadsheets, graphs etc. It advises
management about the likely results of its intended decisions.
Management accounting information is concerned with planning and
control decisions that managers are required to make regularly. Planning
decisions relate to the setting of goals or objectives and the formulation of
policy. Control involves the comparison of actual results with standards
set e.g., actual expenditure compared to budgeted expenditure. Deviations
from the standard are analysed with a view to implementing remedial
measures.
1.4
Information intended for managers must be effectively and timeously
communicated. The information must also be user-friendly and
understandable.
The environment in which the enterprise operates is never static and
management accounting must therefore be flexible so that it can respond
to changes. The environment must be monitored closely so that
information can be updated or amended.
There must be good co-operation between the management accounting
section and the other business functions. For example, the preparation of
budgets requires the co-operation of all departments in the enterprise.
The management accounting department must ensure that the managers
who use the information it provides are well trained in the techniques and
the processes that go into making the information usable.
1
NOVEMBER 2019
MEMORANDUM
PREPARED BY: MTHOMBENI
0767297208
, QUESTION 1
1.1 A branch of accounting that provides financial information for internal use by
management. It is concerned with financial information that is useful to the
management
1.2 A branch of accounting that deals with summary, analysis and reporting of
financial transactions related to a business
1.3
Management accounting serves the following functions:
It provides information for managers that enable them to make better and
informed decisions. Management requires a steady flow of information to
respond to possible problems that may be starting to develop or to be
proactive in ensuring that certain problems do not occur. This information
could be in the form of reports, spreadsheets, graphs etc. It advises
management about the likely results of its intended decisions.
Management accounting information is concerned with planning and
control decisions that managers are required to make regularly. Planning
decisions relate to the setting of goals or objectives and the formulation of
policy. Control involves the comparison of actual results with standards
set e.g., actual expenditure compared to budgeted expenditure. Deviations
from the standard are analysed with a view to implementing remedial
measures.
1.4
Information intended for managers must be effectively and timeously
communicated. The information must also be user-friendly and
understandable.
The environment in which the enterprise operates is never static and
management accounting must therefore be flexible so that it can respond
to changes. The environment must be monitored closely so that
information can be updated or amended.
There must be good co-operation between the management accounting
section and the other business functions. For example, the preparation of
budgets requires the co-operation of all departments in the enterprise.
The management accounting department must ensure that the managers
who use the information it provides are well trained in the techniques and
the processes that go into making the information usable.
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