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Chapter 1
Accounting for ManagementIbrahim Sameer (MBA - Specialized in Finance,
B.Com Specialized in Accounting & Marketing)
www.ibrahimsameer.wordpress.com
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Information
What is the difference between Data &
Information?
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Information
Datais the raw material for data processing. Data
relate to facts, events and transections and so
forth. Information is data that has been processed in
such a way as to be meaningful to the person
who receives it. Information is anything that is
communicated.
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Information
Qualities of good information
Good information should be relevant, complete,
accurate (not completely accurate or 100%accurate), clear, it should be inspire confidence,
it should be appropriately communicated, its
volume should be manageable, it should be
timely and its cost should be less than the
benefits it provides.
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Planning, Control & Decision
Making
Planning
Information for management is likely to be used for
planning, control and decision making.
Planning involve establishing objectives and
selecting appropriate strategies to achieve
those objectives.
Planning can be short term or long term
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Planning, Control & Decision
Making
Objectives of organization
An objective is the intent or aim or goal of an
organization (or an individual). A strategy is apossible course of action that might enable an
organization (or an individual) to achieve its
objectives.
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Planning, Control & Decision
Making
Long term strategic Planning
Long term strategic planning also known as
corporate planning, involves selectingappropriate strategies so as to prepare a long term
plan to attain the objectives.
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Planning, Control & Decision
Making
Short term tactical Planning
Short term tactical planning convert the corporate
planning into a series of short term plans, usuallycovering one year, which relate to sections,
functions or department.
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Planning, Control & Decision
Making
Decision making
Decision making always involves a choice
between alternatives and it is the role of themanagement accountant to provide information so
that management can reach an informed decision.
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Anthonys View of Management
Activity
Anthony divides management activities into
strategic planning, management control and
operational control.
Management control is concerned with decisions
about the efficient and effective use of an
organizationsresources to achieve objectives or
target.
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Management Control System
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 organization are being met
and the plans devised to attain them are being
carried out.
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Types of Information
Information within an organization can be analyzed
into three levels assumed in Anthonys hierarchy
strategic, tactical and operational.
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Types of Information
Strategic information is used by senior manger.
Eg: Preparing Strategic Plan of the organization.
Tactical information is used by the middlemanagement. Eg: Monthly variance report.
Operational information is used by front-line
managers. Eg: Any routine work.
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Financial Accounting & Cost &
Management Accounting
Financial accounting systems ensure that the
assets and liabilities of a business are properly
accounted for, and provide information about
profits and so on to shareholders and other
interested parties.
Management accounting systems provide
information specifically for the use of managers
within an organization.
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Financial Accounting & Cost &
Management Accounting
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Financial Accounting & Cost &
Management Accounting
Cost Accounts
Cost accounting and management accounting are
terms which are often used interchangeably. It isnot correct to do so. Cost accounting is part of
management accounting. Cost accounting
provides a bank of data for the managementaccountant to use.
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Financial Accounting & Cost &
Management Accounting
Cost accounting is concerned with the following:
Preparing statement (eg: budget, costing)
Cost data collection
Applying costs to inventory, product and services.
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Financial Accounting & Cost &
Management Accounting
Management accounting
It is concerned with the following:
Using financial data and communicating it as
information to users.
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Questions & Answers
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Thank You
Ibrahim SameerSeek knowledge from cradle to grave
