Question 1a

Financial accounting refers to processing or records, summarizing and reporting transactions resulting from business activities and operations that occur over a duration of time. The transactions are summarized for the purposes of preparing for financial statements such as the balance sheet and cash flow (Ramachandran, 2008).

Question 1b

 The immediate purpose of financial accounting are named below

Financial accounting is designed to accurately reflect on business activities; help organizations or companies abide and meet the requirements o stipulated by the law. They also reveal financial accounts to entrepreneurs   and allow for the upgrading evaluation and enable efficient resource allocation (Ramachandran, 2008).

Question 1c

Management accounting refers to a procedure of preparing a management report and account that provides accurate and on time   financial and statistical data needed by a manager to carry out daily short term choices (Ramachandran, 2008).

Question 1d

Fours ways management accounting contrasts with financial accounting

Financial accounting produces yearly reports  for external stakeholders  whereas management accounting  comes up with rep3ort every month  or very  week meant  for a company’s  internal audience,  for example departmental managers  and  chief executive officers (Ramachandran,2008).

 In terms of past and present usage, Data generated from financial accounting is historical and is collected over a period of time. On the other hand, focuses on past performances and comes up with information that can be used for 1future business forecasts (Ramachandran, 2008).

In the context of regulating and uniformity there are some glaring contrasts between financial accounting and management accounting the manner in which they treat legal matters .Reports  produced  through management accounting  can only be move internally  each individual organization or company has the freedom  to come up  with its own structure  and rules  on the management report. On the other hand, financial account reporting is highly regulated .this actually evidenced in documents such as   income statement, balance sheets and cash flow statements data. Most of the documents generated through financial accounting  are meant for public consumption hence companies  are extra careful in the manner in which  they go about  their calculations  and how the figure a and the manner in which he reports are  written (Ramachandran,2008).

In terms of the manner in which they report details, financial accounts reports are more aggregating. Concise and generated. Information is straight forward and not too elaborative .This is not the case with management accounting. The reports are very detailed and elaborative. They are technically structured to contain specific information   and often experiment. Organizations are often looking for a loophole they can capitalize on and make it a competitive advantage over their rivals so t they evaluate a load of information   so intricate for outsiders to understand (Ramachandran, 2008).

 

 

 

Question 1e

There are ways in which financial accounting is similar to managing and accounting. Both management and financial accounting   are meant to provide vital information to organizations or firms, potential investors, a creditor or a lender. The information therefore is used to assist people make informed choices about trade equity and debt instrument. They generate relevant data to internal organization managers for the purpose of making wise choices on how to   improve management better a firm or company. Both processes create financial reports. Both financial and management accounting put data in report format so that managing and executive can revise    and review. For example they review balance sheets that reveal a company’s position at a particular time frame. They need accounting type of education skills. They require individual skilled in recognized field of accounting and material courses before they can qualify for the degree course (Mathur, 2011).

 

Question 2a

Understanding management accounting is vital for a manager who has not specialized accounting as he   can easily integrate his management accounting skills evaluation and techniques   to make a, more informed decision and reduce uncertainty. Management skills   can be used to interpret accounting data   to determine what should be sold and what items should remain .gaining insight on managing accounting helps to examine the expenses   that differ   and provide alternatives to improve the situation. Accounting gives management access to information required to explain and whether a business may make a profit or a loss. And how much debtors owe a business and the amount of money owed by the business entity to others. Accounting measures transactions within a firm which in turn helps pinpoint manage to the right direction or cause of action. Generally accounting is a vital tool used   by managers to make good choices and move a company forward (Mathur, 2011).

 

 

 

Question 2b

Management accounting systems assist in the following management functions:

Planning

Is coming up  with long and short term plans and  actions to assist in achieving particular  objectives .Data contain in management system help in planning  as it  makes decision making easier  and  budgeting procedures are generated  form accounting related report (Mathur,2011).

Organizing

A firm’s framework can be established through its organizational procedures and the manner in which they assign different responsibilities to various personnel within the company for the sake of achieving a particular objective .organizational structures vary from one business to the other. Organization gives defines the roles of each manager and draws the line of author. Management accounting assist managers in organizing by giving relevant information in terms of report. These reports contain data that assist in regulation and adjustments in operational activities in case of any change (Mathur, 2011).

Controlling

One can only control when thy have data necessary to monitor, measure, analyze and correct outcomes. Control can only be achieved through feedback. Management accounting provides feedback required to carry out the above functions (Mathur, 2011).

 

Question 2c

 The most important thing about management accounting (Mathur, 2011).

It has the ability to predict cash flow.

Question 2d

Impact of cash flow on a business is highly valuable. It reveals the steps, risks that a business can take or incur, everything within a business is governed by cash flow therefore having a tool that can predict cash flow is very valuable (Mathur,2011).

 

Question 2e

In the future predicting cash flow will assist to effectively run my business and take necessary risks without incurring unnecessary loses. It will also help to eval3ute my returns within the business (Mathur, 2011).

 

 

Question 3a

 These are four principles of the Institute of management Accountant’s statement of ethical professional practice

Honesty

Being fair to all

Objectivity

Responsibility (Mathur, 2011).

Question 3b

It encourages   nonmembers managers and other individual   in adopting, promoting and carrying out business procedures continuously while maintaining high levels of integrity (Mathur, 2011).

 

Question 3c

He would have violated the principle of honesty if he dis closes vital information to another their party (Mathur, 2011).

 

Question 3d

He would have vital the principle of .It his duty to prepare a report and maintain proper qualities of the report (Mathur, 2011).

 

Question 3e

He would have violated the principle of fairness. Filing to reveal vital information to so that another individual can understand is unfair (Mathur, 2011).

 

Question 3f

 Competence is the principle needed in that context. (Mathur, 2011).

Question 4a

Various operating and financial budgets that would be included in a master budget:

 The direct Labor budget is normally used for calculating the number of Labor durations that will be required to generate the units   contained in the production budget. It contains aggregated information hence cannot be used for hiring of personnel. Direct material budget calculates the materials that must be bought during a certain period of time in order to meet certain requirements   within the production budget. Ending finished good inventories budget is meant for calculating   the price of a finished good inventory    at the end of each and every budget duration. It contains the unit quantities at End of budgeting period. Manufacturing overhead budgets has all the manufacturing prices or expenses other than costs of direct material and labor that are contained in different budgets. Production budgets are used for calculating the number    of units of items that need to be processed into finished goods. Sales budget has all the items of a firm’s sale expectations for a budget duration in unit and dollars. Selling and administrating expenses budgets it is made up of a combination of budgets of each and every non-Manufacturing sections. Sales and marketing are some of the departments (Nilsson, 2015).

 

Question 4b

Sales budget. It contains goals   and objectives which helps to direct everything else in the company.it has quantities   that are expected to be sold within the budget period (Nilsson, 2015).

 

Question 4c

It is a ‘bottom up’ approach that allows them to think   and forecast the future.

  It enhances coordination and   hence goo communication skills due to participation by different people. It increases the morale of the workers and satisfaction .They are more knowledgeable of their personal operations. Improves understanding and commitment to individual duties (Nilsson, 2015).

 

Question 4d

 It is consumes a lot of time and more expensive to generate and monitor. It may also contain a lot of mistakes due to inaccuracies caused by inexperience hence very inefficient (Nilsson, 2015).

 

Question 4e

 They can give genuine guidelines   to the lower level managers. The guidelines t will contain limits and estimations   and will help out in the long run (Nilsson, 2015).

 

Question 5a

  Price may be generated to give a more logical total cost within the inventory (Nilsson, 2015).

Question 5b

The distortion is unsuspected   and was not planned for hence leading to poor choices.

Question 5c

It an accounting methodology that identifies exercises an organization is performing then defines prices to items or goods (Nilsson, 2015).

Question 5d

The systematic ABC has the ability of recognizing the relation that exists between, prices, exercises and products. Through recognizing this relationship I is able to put indirect prices to the items hence easier than conventional ways (Nilsson, 2015).

Question 5e

ABC is a gives the accurate price of a product which improves credibility that in turn enhances better budgetary plans. Information in the budgets leads to better choices (Nilsson, 2015).

 

Question 6a

It gives a competitive edge over the rest of the competitors. Quality gives a company credibility   and helps shape the image of a company to the market. A global market contains multicultural societies that might affect company profit margins within the company in the long term. Qualities product pot4rays the   ethics and mission of the company in terms of offering good services (Nilsson, 2015).

Question 6b

There are four groups of quality costs

Preventive cost is incurred so as to keep quality challenges from emerging.it is one of the least expensive ways quality can be improved. Appraisal cost it is normally incurred so as to keep quality challenges from emerging unexpectedly.it is carried out through a series of inspections. Internal failure cost.it occurs when a defective item is produced. External failure cost.it is incurred when a defective item is created but the cost is more pronounced (Nilsson, 2015).

 

 

 

 

Question 6c

Preventive cost examples: proper training and education of workers. Statistical procedures. Appraisal cost examples: inspecting both products being brought in and the ones coming out at the workstation. Internal failure cost examples: reworked items or scrapped metals.

External failure costs examples: warranty accusations and unquantified costs (Nilsson, 2015).

Question 6d

External failure cost. This is because the defects in the product is discovered by a consumer (Nilsson, 2015).

Question 6e

In the preventive cost category it should reduce the cost incurred. The appraisal costs should be moderated thoroughly through inspections. Internal costs should be increased to prevent wastage of money External cost should be increased to improve profit margins within different markets and give a good impression to consumers (Nilsson, 2015).

Question 7a

Fixed cost is the price that remains constant even though the amount of output alters. For example, when a firm A, incurs 1million to generate 1 million widgets annually .This means 1milion expenses also include 500,000 of administrating, insurance and advertising expenses (Nilsson, 2015).

Question 7b

Variable cost refers to corporate expenses that alters according to the producing output.

Examples: yearly widget generated=100, 00

Raw material expense= 10000

Direct labor=50000

Variable total =5000(0.10+0.50) =3000 (Nilsson, 2015).

Question7c

I mixed cost is a cost    that has both fixed and variable costs.it can be exemplified by this formula: y=a+bx (Nilsson, 2015).

 

Question 7d

One of the ways is through preparing a scatter graph and plotting the points accurately

 The second method is through the high low method utilizes two of plotted intervals on the graph (Nilsson, 2015).

Regression evaluation utilizes each month’s electricity costs with their corresponding number equipment’s in hours to measure fixed cost (Nilsson, 2015).

Question 8a

All expenses are classified based on either fixed or variables hence hard to define all costs. The traits of costs will be straight within a given range (Nilsson, 2015).

Question 8b

The standard expenses are founded due to completion purposes of a unit of product (Nilsson, 2015).

Question 8c

 It means that standard costs are problematic and cannot be used to measure quality.

Question 8d

 They apply it in terms of service delivery and in terms of production of goods (Nilsson, 2015).

Question 8e

 It cannot be used to forecast future finances and cannot be used to produce useful data within the organization (Nilsson, 2015).

Question 8f

 It is slower than the, modern methods hence not cost defective to keep up in manufacturing products (Nilsson, 2015).

Question 9a

Product costs are incurred monthly and period cost occur annually (Nilsson, 2015).

 

Question 9b

It treats it as expenses for all variables as well as fixed processing costs (Nilsson, 2015).

Question 9c

It is experienced while manufacturing procedures and it is incurred during the fixed period (Nilsson, 2015).

Question 9d

Yes the finished product would lead to and a high increase as the year progresses and the absorption due to the expenses incurred (Nilsson, 2015).

Question 9e                                    

 

No it would not lead to any change since the procedural change would take time to actualize itself (Nilsson, 2015).

Question 10a

They do not take time to use the expertise of professional, marketers who can correlate profits and sales revenue of the firm (Nilsson, 2015).

Question 10b

As the manager work very closely with personnel work usually come into contact with the customers. This will make me to   feedback form the customers to establish the cause of the problem (Nilsson, 2015).

Question 10c

 The profit costs will increase .good marketing would attract more customers. The profit in my division would plummet due to the increased activities meant to please customers (Nilsson, 2015).

Question 10d

Invest in more quality products to please the customers. Give them more special offers and premium bonuses to demonstrate their importance to the firm and to give them a sense of appreciation (Nilsson, 2015).

Question 10e

 The stock will improve on the stock market and the profits are likely to increase (Nilsson, 2015).

 

 

 

 

 

References

 

Mathur, S. B. (2011). Accounting for management. New Delhi: Tata McGraw-Hill Education.

Nilsson, F. (2015). Financial accounting and management control: The tensions and conflicts between uniformity and uniqueness.

Ramachandran, N. (2008). Financial accounting for management. New Delhi: Tata McGraw-Hill.