Accg Tutorial Answer
Week 2 – Commencing 5th March
1.3
These three levels of managers require different forms of management accounting information because of the very different nature of the decisions that they make and their different areas of responsibility. For example, senior managers may spend considerable time making strategic decisions for the entire organisation so require information about markets, customers and competitors. They also need to monitor the financial performance of the entire organisation, therefore require a financial summary of the organisation. Middle managers need information that relates to their area of responsibility – a division or department. Operations managers need detailed and frequent information to help them manage the dayto-day decisions and problems in the operational areas of the business.
1.5
The important differences between management accounting and financial accounting are listed below. (a) Management accounting information is provided to managers and employees within the organisation, whereas financial accounting information is provided to interested parties outside the organisation. Management accounting reports are unregulated, whereas financial accounting reports are legally required and must conform to Australian accounting standards and corporations law. The primary source of data for management accounting information is the organisation’s basic accounting system, plus data from many other sources. These sources will yield data such as rates of defective products manufactured, physical quantities of material and labour used in production, occupancy rates in hotels and hospitals and average take-off delays in airlines. The primary source of data for financial accounting information is almost exclusively the organisation’s basic accounting system, which accumulates financial information. Management accounting reports often focus on sub-units within the organisation, such as departments, divisions, geographical regions or
1.3
These three levels of managers require different forms of management accounting information because of the very different nature of the decisions that they make and their different areas of responsibility. For example, senior managers may spend considerable time making strategic decisions for the entire organisation so require information about markets, customers and competitors. They also need to monitor the financial performance of the entire organisation, therefore require a financial summary of the organisation. Middle managers need information that relates to their area of responsibility – a division or department. Operations managers need detailed and frequent information to help them manage the dayto-day decisions and problems in the operational areas of the business.
1.5
The important differences between management accounting and financial accounting are listed below. (a) Management accounting information is provided to managers and employees within the organisation, whereas financial accounting information is provided to interested parties outside the organisation. Management accounting reports are unregulated, whereas financial accounting reports are legally required and must conform to Australian accounting standards and corporations law. The primary source of data for management accounting information is the organisation’s basic accounting system, plus data from many other sources. These sources will yield data such as rates of defective products manufactured, physical quantities of material and labour used in production, occupancy rates in hotels and hospitals and average take-off delays in airlines. The primary source of data for financial accounting information is almost exclusively the organisation’s basic accounting system, which accumulates financial information. Management accounting reports often focus on sub-units within the organisation, such as departments, divisions, geographical regions or