What is continuous improvement?
A. An ongoing process where continuous improvement is the goal
What information do senior executives use?
D. Senior executives use general economic information as well as financial information.
What is information characterized by?
C. information is characterized by objectivity, reliability, consistency, and accuracy.
Which accounting method uses economic and physical data in addition to financial data?
B. Both managerial and financial account ing use economic and physical data in addition to financial data.
When should non manufacturing costs be expensed?
D. Non-manufacturing costs should be expensed in the period in which they are incurred.
Which activities should be restricted to those activities that add value in excess of their cost?
C. Information gathering and reporting activities should be restricted to those activities that add value in excess of their cost.
Which group needs more non-financial data?
A. Middle managers need more nonfinancial, or operational data than do senior executives.
What is the best definition of accounting system?
The best definition of an accounting system is: The personnel, procedures, technology, and records used by an entity to develop accounting information and communicate this information to decision makers. The objectives of an accounting system include all of the following, except:
What is confidential accounting?
The information is confidential and is intended for use only by company management. The accounting systems of most business organizations: Are tailored to meet the organization's needs for accounting information and the resources available for operating the system. The best definition of an accounting system is:
What does "dictate" mean in business?
Dicta te the specific types of business transactions the enterprise may pursue.
What is the meaning of collection of historical data?
There is no meaning of collection of historical data. The management accounting attempts to highlight upon what should have been. In this aspect, the use of standard costing, cost variances and budgetary control emphasizes to highlight upon the futuristic nature of management accounting.
How can management fix the target for each department or division through budgetary control system?
The management can fix the target for each department or division through budgetary control system. The actual performance is compared with that of targets. The deviations are find out and classified into two categories i.e.
What is profit and loss account?
Under financial accounting system, profit and loss account is prepared to know the quantum of profit earned or loss suffered. It does not disclose the reasons for such quantum of profit earned or loss suffered.
Why is financial accounting important?
The financial accounting information is presented in the different basis and in different manner which helps the management for proper planning and take quality decisions. It is up to the intelligence of management executives to take valid decision out of available information.
Why is management accounting not necessary?
The reason is that all the financial accounting information are not necessary to management. 2. More Emphasis on Future. There is no meaning of collection of historical data. The management accounting attempts to highlight upon what should have been.
What is management accounting?
Management accounting fixes the standard for various business activities on the basis of the historical information provided by the financial accounting. Actual performance is recorded to compare the actual with standard. If there is any deviations, corrective action can be taken by the management to achieve the objectives.
Is management accounting the same as financial accounting?
Management accounting never follows the rules of financial accounting. But, it is concerned with the information which are highly useful to the management for decision making and control purposes.
Why is management accounting more flexible?
Another feature of management accounting is that it is more flexible as there are no fixed conventions or principals which is the case with financial or cost accounting, hence in management accounting there is more scope of changing things according to situations as and when they arise.
What is management accounting?
Management accounting as the name suggests refers to that accounting which is done for the management, using management accounting the top management makes important strategic decisions regarding the future of the company from the data gathered from financial and cost accounting.
Do companies have to publish management accounting reports?
There is no statutory requirement to publish the reports of management accounting in the public domain and hence company does not have to stress about publishing the reports every quarter or year which is the case with a balance sheet or other reports of financial and cost accounting. In simple words just like students going to coaching classes do not have to worry about the marks obtained in the mock test as it is for internal evaluation only in the same way the company does not have to do management accounting every year as it is done for internal purpose only.
Is management accounting public domain?
Management accounting is meant for internal users only that is the top management of the company unlike cost or financial accounting which are prepared for external parties like shareholders, creditors, employees, government and so on. There is no statutory requirement to publish the reports of management accounting in the public domain ...
Why is cloud accounting software important?
There is no doubt that an cloud ERP accounting software is essential for all kind of organizations, to improve their business and work efficiency as well as the accuracy.Account ing software enables organizations to manage business's accounts and financial transactions with efficiency. Accounting programs can vary widely some programs are designed for simple accountancy tasks and some are capable of regulating the entire financial comings and goings of large businesses. Accounting software ’s comprise functional modules such as the journals, general ledger, payroll, accounts payable, accounts receivable and trial balance. It functions within an organization as an accounting information system. To simplify accountant’s life finance and management software’s are designed with flexible features.
Why is accounting and finance software important?
It is important for an organization to pay key attention to such features while selecting a software for them because they couldn’t be ignored or overlooked. If an accounting & finance software owns these features it means that the vendor paid proper attention to the client's requirements by understanding their need for business.
What are the core features of accounting and finance software?
Billing, ledger, account debit and credits are the core features of any accounting & finance software but besides these core features, there are some key features that every accounting & finance software must own, some of them are enlisted below.
What does computerized accounting software mean?
Computerized accounting software means that it will work automatically without disturbing the client.
What is the importance of analysis and reporting in ERP?
Reports record maintenance is a basic need of any business to analyze and report in the critical financial situation. Easy access to the records can facilitate the major tasks and meetings within organizations. At the time of decision making, this analysis and report will help the management and save their maximum time as well as the stress.
Why is software not customizable?
If a software is not customizable than it might create hurdles for the accountants to work according to the organization requirements. It must be handy in customization of data and reports according to the client's ease and requirements.
Why is account department important?
7- Security. Account department always possesses confidential and important information known as secrets of any organization there it is very important to keep secure and safe its data. There a security feature is important as well essential for any organization.
Why is qualitative accounting important?
The qualitative characteristics of accounting information are important because they make it easier for both company management and investors to utilize a company’s financial statements to make well-informed decisions.
What is the purpose of comparability?
Comparability is the degree to which accounting standards and policies are consistently applied from one period to another. Financial statements that are comparable, with consistent accounting standards and policies applied throughout each accounting period, enable users to draw insightful conclusions about the trends and performance of the company over time. In addition, comparability also refers to the ability to easily compare a company’s financial statements with those of other companies.
Why is timely important in accounting?
Timeliness matters for accounting information because it competes with other information. For example, if a company issues its financial statements a year after its accounting period, users of financial statements would find it difficult to determine how well the company is doing in the present.
Why is accounting information important?
Therefore, accounting information is relevant if it can provide helpful information about past events and help in predicting future events or in taking action to deal with possible future events.
How many pages are annual reports?
In today’s society, corporate annual reports are in excess of 100 pages, with significant qualitative information. Information that is understandable to the average user of financial statements is highly desirable.
What is salvage value?
Salvage Value Salvage value is the estimated amount that an asset is worth at the end of its useful life. Salvage value is also known as scrap value. , depreciation method, and useful life, the accountant should be able to reproduce the same result. If they cannot, the information is considered not verifiable.
What is representational faithfulness?
Representational faithfulness, also known as reliability, is the extent to which information accurately reflects a company’s resources, obligatory claims, transactions, etc.
Selective Nature
More Emphasis on Future
- There is no meaning of collection of historical data. The management accounting attempts to highlight upon what should have been. In this aspect, the use of standard costing, cost variances and budgetary controlemphasizes to highlight upon the futuristic nature of management accounting.
Provides only Information But No Decision
- The financial accounting information is presented in the different basis and in different manner which helps the management for proper planning and take quality decisions. It is up to the intelligence of management executives to take valid decision out of available information.
The Problem of Choice
- An attempt is made to solve the managerial problems. For which, a comparative analysis of various available alternatives are taken into account and only that alternative is normally selected which seems to be more attractive and profitable. For example, Capital Budgeting techniques.
Study Causes and Effects Relationship
- Under financial accounting system, profit and loss account is prepared to know the quantum of profit earned or loss suffered. It does not disclose the reasons for such quantum of profit earned or loss suffered. But, under management accounting system, it study the cause and effects relationship prevailing between the variables which affect business activity and profitability thro…
Importance to Elements of Costs
- The total costis divided into fixed, variable and semi-valuable under management accounting system. Moreover, it highlights the nature and characteristics of each such costs with reference to varying production levels.
Not Bounded by The Rules of Financial Accounting
- Management accounting never follows the rules of financial accounting. But, it is concerned with the information which are highly useful to the management for decision makingand control purposes.
Recognition of Non-Monetary Variables
- Non-monetary variables such as efficiency of employees, labour turnover, policy of management, organization culture, market conditions and consumers or customer behaviorare taken into account before taking a decision by the management. Under these circumstances, the management consider the monetary information for supporting their decisions.
It Modifies, Analyses and Interprets Data
- The financial accounting information are modified, analyzed and interpreted with new dimensions. In this way, data help the management to take the line of action towards control of destiny of an undertaking.
No Specific Rules and Conventions
- Financial Accounting System has rules and conventions to record the business transactions in the books of accounts. But, there is no such rules and conventions to the management accounting. Moreover, the tools and techniques applied by the management are varying from one period to another and one concern to another. The conclusions derived from the application of a techniqu…
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