TRUE FALSE 1. Management Accounting/Managerial Accounting (MA) is similar to Fin
ID: 2329764 • Letter: T
Question
TRUE FALSE 1. Management Accounting/Managerial Accounting (MA) is similar to Financial Accounting (FA) 2. A different set of Ledgers (accounting records) is required for Management Accounts 3. M.A. involves significant analytical work 4. The standards for MA are different than those for FA 5. The same database information is used for both FA &MA 6. The objective of FA is to satisfy GAAP requirements i.e. to have fair presentation of financial information to stakeholders of businesses what is the objective of MA? 7. Similarities 8. Differences 9. What are the fundamentals of MA 10. What is the relationship between Cost Accounting and Managerial AccountExplanation / Answer
1.False -Financial accounting has its focus on the financial statements which are distributed to stockholders, lenders, financial analysts, and others outside of the company. Managerial accounting has its focus on providing information within the company so that its management can operate the company more effectively.
2.True- A different set of ledgers is required in management accounting
3.True-Management accounting is the process of preparing management reports and accounts that provide accurate and timely financial and statistical information to managers to make short-term and long-term decisions. It identifies, measures, analyzes, interprets, and communicates information to enable an organization to pursue its goals.
4.True-Managerial accounting is more concerned with operational reports, which are only distributed within a companyStandards. Financial accounting must comply with various accounting standards, whereas managerial accounting does not have to comply with any standards when information is compiled for internal consumption.
5.True-Both are part of total accounting information system and the same accounting information system which is used in financial accounting can be used in management accounting to prepare some reports/analysis needed therein, if not all the reports..
6.Objectives of Managerial accounting
7.Similarities between Financial & Management Accounting.
The similarities between financial accounting and management accounting are given below:
1. Both are the parts of total accounting information system.
2. Economic events are dealt in the both system of accounts.
3. The economic events are qualified only in terms of rupees.
4. Both are concerned with financial statements, revenues, expenses, assets, liabilities and cash flows.
5. Both the system of accounts are accumulating and classifying the accounting information for the preparation of financial statements.
6. Some database is used for preparing financial statements and reports under both system of accounts.
7. Both are determining and measurement of costs for different accounting periods and even for different departments and sections.
8. The same accounting principles and concepts are used in both system of accounts for the purpose of cost accumulation and cost allocation.
8. Differences between Financial & Management Accounting
Financial accounting has its focus on the financial statements which are distributed to stockholders, lenders, financial analysts, and others outside of the company. Courses in financial accounting cover the generally accepted accounting principles which must be followed when reporting the results of a corporation's past transactions on its balance sheet, income statement, statement of cash flows, and statement of changes in stockholders' equity.
Managerial accounting has its focus on providing information within the company so that its management can operate the company more effectively. Managerial accounting and cost accounting also provide instructions on computing the cost of products at a manufacturing enterprise. These costs will then be used in the external financial statements. In addition to cost systems for manufacturers, courses in managerial accounting will include topics such as cost behavior, break-even point, profit planning, operational budgeting, capital budgeting, relevant costs for decision making, activity based costing, and standard costing.
9.the fundamental of management accounting
(1) Planning:
Planning is formulating short term and long-term plans and actions to achieve a particular end. A budget is the financial planning showing how resources are to be acquired and used over a specified time interval.
(2) Organising:
Organising is a process of establishing an organizational framework and assigning responsibility to people working in an organization for achieving business goals and objectives. The type of organizational structure differs from one business enterprise to another. In the organising process, departmentalization can be done by setting up divisions, departments, sections, branches.
(3) Controlling:
Control is the process of monitoring, measuring, evaluating and correcting actual results to ensure that a business enterprise’s goals and plans are achieved. Control is accomplished with the use of feedback. Feedback is information that can be used to evaluate or correct the steps being taken to implement a plan. Feedback allows the managers to decide to let the operations and activity continue as they are, take remedial actions to put some actions back in harmony with the original plan and goals or do some rearranging and re-planning at midstream.
(4) Decision-making:
Decision-making is a process of choosing among competing alternatives. Decision-making is inherent in each of three management functions described above, namely, planning, organising and controlling. A manager cannot plan without making decisions and has to choose among competing objectives and methods to carry out the chosen objectives. Similarly in organising, managers need to decide on an organization structure and on specific actions to be taken on day-to-day operations. In control function managers have to decide whether variances are worth investigating.
10.Relationship between cost accounting and managerial accounting
1.The accounting related to the recording and analysing of cost data is cost accountingThe accounting related to the producing information which is used by management of the company is management accounting
2.Cost Accounting provides quantitative information only. On the contrary Management Accounting. provides both quantitative and qualitative information.
3.Cost accounting is part of Management Accounting as the information is used by the management for making decisions.
4.The primary objective of Cost Accounting is the ascertainment of cost of producing a product, but the main object of the management accounting is to provide information to managers for setting goals and future activity.
5.There are specific rules and procedure for preparing cost accounting information while there is no specific rules and procedures in case of management accounting information.
6.The scope of Cost Accounting is limited to cost data however the Management Accounting has a wider area of operation like tax, budgeting, planning and forecasting, analysis, etc.
7.Cost Accounting is related to ascertainment, allocation, distribution and accounting face of cost. On the flip side, management accounting is associated with impact and effect aspect of cost.
8.Cost Accounting stresses on short-range planning, but management accounting focuses on long and short range planning, for which it uses high-level techniques such as probability structure, sensitive analysis etc.
9.While management accounting can’t be installed in the absence of accounting, cost accounting has no such requirement, it can be installed without management accounts
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.