PAF – Karachi Institute of Economics and Technology City Campus

Course: F5
Faculty: Miss Urooj Istaqlal Date: 27th Jan 2021
Name: Class ID: 106562 Assignment # 1

Name:
Muhammad Adil

Student Id:
63727
 CHAPTER # 1
SUMMARY

 The purpose of management accounting is to assist management in running the business in

ways that will improve the performance of the business.
 One way of assisting management is to provide them with good information to help them
with their decisions.
 The information can be provided to them in different ways, but is usually in the form of
reports. For example, a report analyzing costs of producing.

Data consists of the facts that are gathered and stored. Data has no clear meaning until it is
processed – analyzed and sorted – into information.

THE MAIN AREAS OF MANAGEMENT ACCOUNTING ARE:

Costing
Planning
Decision making
Control
Performance evaluation

THE DIFFERENT LEVELS OF PLANNING

Strategic planning
Long-term plans (e.g. 5 to 10 years) for the business
E.g. what new offices to open? / What new products to launch?
Tactical planning
Medium-term, more detailed, plans – usually involving producing budgets for the next year
E.g. how many staff to employ next year?

Operational planning
Short-term planning and decisions
E.g. which supplier to choose for a purchase next week

 A management control system is a system which measures and corrects the performance of
activities of subordinates in order to make sure that the objectives of an organisation are
being met and the plans devised to attain them are being carried out.
 Financial accounting systems ensure that the assets and liabilities of a business are properly
accounted for, and provide information about profits and so on for shareholders and for
other interested parties.
 Management accounting systems provide information specifically for the use of managers
within an organisation
 Cost accounting and management accounting are terms which are often used
interchangeably. It is not correct to do so. Cost accounting is part of management
accounting. Cost accounting provides a bank of data for the management accountant to
use.