Chapter 1

Accounting for Management Ibrahim Sameer (MBA - Specialized in Finance,

B.Com – Specialized in Accounting & Marketing)

www.ibrahimsameer.wordpress.com

Information

• What is the difference between Data &

Information?

Information

• Data is 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.

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.

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

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 a

possible course of action that might enable an

organization (or an individual) to achieve its

objectives.

Planning, Control & Decision

Making

• Long term strategic Planning

• Long term strategic planning also known as

corporate planning, involves selecting

appropriate strategies so as to prepare a long term

plan to attain the objectives.

Planning, Control & Decision

Making

• Short term tactical Planning

• Short term tactical planning convert the corporate

planning into a series of short term plans, usually

covering one year, which relate to sections,

functions or department.

Planning, Control & Decision

Making

• Decision making

• Decision making always involves a choice

between alternatives and it is the role of the

management accountant to provide information so

that management can reach an informed decision.

Anthony’s 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

organization’s resources to achieve objectives or

target.

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.

Types of Information

• Information within an organization can be analyzed

into three levels assumed in Anthony’s hierarchy

strategic, tactical and operational.

Types of Information

• Strategic information is used by senior manger.

Eg: Preparing Strategic Plan of the organization.

• Tactical information is used by the middle

management. Eg: Monthly variance report.

• Operational information is used by ‘front-line’

managers. Eg: Any routine work.

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.

Financial Accounting & Cost &

Management Accounting

Financial Accounting & Cost &

Management Accounting

• Cost Accounts

• 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.

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.

Financial Accounting & Cost &

Management Accounting

• Management accounting

• It is concerned with the following:

• Using financial data and communicating it as

information to users.

Questions & Answers

Thank You

Ibrahim Sameer Seek knowledge from cradle to grave