Professional Documents
Culture Documents
Accounting For Management
Accounting For Management
This is just a summary for revision purpose students are requested to read the book for details
Data
Information
Example
• Daily sales transactions – data. Processing this data into a record, Sales day book – provides information
about the sales made during a specific period.
• Daily time sheets for labor working on a specific job is data. Adding them up to calculate total labor cost
for job is information.
• Understandable – You must consider the fact that the information you prepare will not only be used by
accountants but by general users too therefore the information must be set out in easy and well
explained words. Although you may expect certain basic knowledge from readers.
• Relevant - Information must bear on the decision-making process by possessing predictive value
(relevance of notes to accounts to investors, creditors and other users of financial statements)
• Comparability – the information must help user to make comparisons. It must enable users to identify
similarities and differences. (two companies may use different stock valuation basis – fifo and avco , the
notes to accounts must identify this difference in valuation of inventory)
• Timeliness – Provided as soon as it is prepared. The older the information gets the less useful it is. (Audit
deadlines set so that annual reports are issued in time)
ACCURATE
Non-financial information is as useful for management as is the financial information for planning, controlling and
decision-making purpose.
Planning
Control
• Operational plans and actual results are compared with each other and causes for any deviations are
investigated and corrective actions taken.
• The overall corporate plan is reviewed in light of the findings and if there are any changes noted in the
external environment the plan is modified appropriately.
Decision making
• It is all about taking right selection of action between two alternative choices.
THREE TYPES OF MANAGEMENT ACTIVITY ACCORDING TO ANTHONY (Leading writer on organizational control)
• Everything linked with organization objectives – deciding them, changing them and on deciding about the
resources to be used to attain these objectives.
Tactical control -
• Process by which managers assure that they obtain the resources(men, material, machine and money)
required for accomplishment of corporate objectives and ensure that they are used effectively.
• System to measure and correct performance of activities of individuals to ensure that they are in line
with the objective of the organization.
TYPES OF INFORMATION
Strategic
Tactical
Operational