Unit 101-Financial Management Frequent Exam Questions
Financial Management-Unit 101 Exam Questions
1. What is the role of management accounting? What are the primary difference between management accounting and financial accounting?
Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.
According to the Institute of Management Accountants (IMA): "Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy".
This information can be used for: * planning (that is, developing objectives, strategies and operating plans) * identifying organizational problem areas * Controlling resources and ensuring they are obtained and used in accordance with plans to achieve objectives. (AICPA) states that management accounting as practice extends to the following three areas: * Strategic management—advancing the role of the management accountant as a strategic partner in the organization. * Performance management—developing the practice of business decision-making and managing the performance of the organization. * Risk management—contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.
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Managerial accounting is concerned with providing information to managers i.e. people inside an organization who direct and control its operations. In contrast, financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an
1. What is the role of management accounting? What are the primary difference between management accounting and financial accounting?
Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.
According to the Institute of Management Accountants (IMA): "Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy".
This information can be used for: * planning (that is, developing objectives, strategies and operating plans) * identifying organizational problem areas * Controlling resources and ensuring they are obtained and used in accordance with plans to achieve objectives. (AICPA) states that management accounting as practice extends to the following three areas: * Strategic management—advancing the role of the management accountant as a strategic partner in the organization. * Performance management—developing the practice of business decision-making and managing the performance of the organization. * Risk management—contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.
_________________________________________________________________
Managerial accounting is concerned with providing information to managers i.e. people inside an organization who direct and control its operations. In contrast, financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an