Forum 5: Management Accounting

Forum 5: Management Accounting

Answer the questions properly:

1.      How can management accountants help a business?

2.      Do you agree that management accounting is more valuable to a company than financial
accounting? Why / why not?

3.      'Accounting records the past while management accounting predicts the future' Do you
agree? Why / why not?

Find the definitions of the words or phrases below!

- overheads

- management accountant

- benchmark

- budgeting

- entity

Answer

Good afternoon

1. How can management accountants help a business?

Management plans are formally shown as budgets, and the term "budgeting" usually talks about
management planning. The controller supervises the creation of budgets. Budgets are often
prepared for individual teams and departments within a company as well as for the company as
one entity. After the budgets have been established, managerial accountants collect information
generated by the organization that indicates the actual company performance in contrast to the
budgeted figures. Management accountants actually help shape company policy and the direction
that the company will take in the future. The primary function of managerial accounting is
focused on increasing knowledge inside a company and as a result reducing risks connected with
decision making. Accountants can draft reports on the cost of production, workforce expenditure,
and the cost of various projects and schemes, among other activities. Managers may then utilise
these reports to measure the difference, or "variance," between the expected and actual results, or
to compare performance to other benchmarks.
2.  Do you agree that management accounting is more valuable to a company than financial
accounting? Why / why not?

I agree with that, management accounting is more valuable than financial accounting because
management accounting is used internally to run companies and help managers make important
financial decisions according to the Motley Fool. Managers must think about the future of the
company, so management accounting is significant in planning ahead financially and projecting
growth based on estimates of what will happen.

3. 'Accounting records the past while management accounting predicts the future' Do you
agree? Why / why not?

Yes I do. Reports are created to analyse cost and benefit relationships connected to different
variables. For example, if a company's competitor lowers its prices, management may ask for a
report comparing possible responses, such as lowering its prices, or increasing advertising. These
reports usually include the collection of outside data as well as forecasting. 

Find the definitions of the words or phrases below!

 Overheads : refers to the ongoing business expenses not directly attributed to creating a
product or service.
 Management accountant :  involves the presentation of financial information for
internal purposes to be used by management in making key business decisions.
 Benchmark : is a standard against which the performance of a security, mutual fund, or
investment manager can be measured.
 Budgeting : is a process of looking at a business' estimated incomes and expenditures
over a specific period in the future.
 Entity : is a separate and distinct business unit for accounting purposes.

Thank you

Novia Laksmita (43219110129)

1.      How can management accountants help a business?

Answer : management accountants provide key insights that help a company’s management
team make many of their decisions. They also support decision making within a company by
providing a wealth of financial and statistical information, often assisted by powerful accounting
software.

 2.      Do you agree that management accounting is more valuable to a company than
financial accounting? Why / why not?
Answer : Yes, I don't agree because Managerial accounting and financial accounting are
stronger together. While it's certainly possible for a business to use only financial accounting,
putting managerial accounting into the mix will provide businesses with the best of both worlds:
accurate financial statements and a way to plan for a brighter future.

3.      'Accounting records the past while management accounting predicts the future' Do
you agree? Why / why not?

Answer : Yes, I agree. Because management accounting has a wider scope than financial
accounting and management accounting on the other hand is based on historical and predictive
information.

 Overhead expenses are all costs on the income statement except for direct labor, direct
materials, and direct expenses.
 Management accountants analyse information to advise strategy and drive sustainable
business success
 Benchmarks are used in accounting and financial analysis to make comparisons between
different companies and industry norms.
 Budgeting is a process of looking at a business' estimated incomes (the money that
comes into the business from selling products and services) and expenditures (the money
that goes out form paying expenses and bills) over a specific period in the future.

 Entity : is an organizational structure that has its own goals, processes, and records

Thank you
Putri Rachel 43219110017