Resume
Summary Management Accounting
- Cours
- Management Accounting
- Établissement
- Katholieke Universiteit Leuven (KU Leuven)
een samenvatting van de lessen, boek en ppt
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Aperçu du contenu
Chapter 1: Role of management accountantsAccountancy= collecting financial information, summarizing it and making a report of it.
We do this because there are people who are interested in it, stakeholders in and around the
company.
Financial statements: balance sheet & profit and loss account (resultatenrekening)
Activities for financial accounting:
Bookkeeping: you systematically register everything transaction in a company
Is it the assets or the liabilities who has an influence
Is it a cost or a revenue
To keep track of everything
Consolidation: if you have a company that is linked o another company and they form a
group, that you give an overview of the financial situation of the hole group
How solid are they as a group?
Financial statement analysis: you analyze how financially healthy an external company is
External auditing: an external company that is appointed by a company to check their books
and financial situation
It is an obligation for the bigger companies
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,Activities for management accounting:
Cost accounting: we are interested in how much it costs
Cost management: you try to manage the situation
How can we reduce the costs
When you know the situation you try to improve the situation
Strategic long term planning: this goes further than a year, you try to see for the next three
years where you stand
Make the strategic goals clear, but in financial terms
How big do we want are sales to grow?
Do you want to grow in Amerika or China
Budgeting: the process of calculating how much money you must earn or save during
a particular period of time, and of planning how you will spend it
Masterbudget= the budget for the hole company you try to predict for the year
Management control: steering people’s behavior
How are you going to steer the behavior of the leader of the production, for example you
give him a bonus when he can reduce the costs
!! Different accounting systems for different purposes
But they are linked, because you use the same basic information for both
Management accounting is directed at internal reporting
Importance of value chain analysis
Importance of planning & control systems
You need to understand the value chain, because you want to know where the company adds value
to its products.
Value Chain Analysis
Which functions can be identified in the value chain, which dependencies can be made, and what are
the consequences for the management accounting system?
The better an accountant displays this correctly, the more useful information they can provide, the
better the company can align itself to achieve its goals.
Planning and control systems
Organizations need useful planning and control systems to develop and implement their strategy.
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,Management accounting is there to help implementing the strategy, the managers want a plan and
that it reflect the budgets in the plan.
LINK: we try to sustain as management accountants, we try to sustain managerial descions
If you didn't perform as planned, you need to find the reason for this
(see chapter about variance analysis)
Role of management accountants
Contribution of management accountants to the company’s decisions about strategy, planning and
control:
Problem solving/Decision-making
• Planning: most important tool = budget
You ask the sales people about the expected sales and based on this you start producing
and this way you know how many people you need.
We have our goals, we are going to be able to achieve them
• You want to outsource your transportation, so you ask offers by different companies and
choose one.
Scorekeeping
• Performance measurement
Did we reach our targets?
Attention directing
• Control: taking actions that implement planning decisions, deciding how to evaluate
performance, providing feedback to help future decision making
When you didn’t reach the goals, search for, WHY you didn’t sell (ex. Corona)
Management accounting guidelines
• Cost–benefit approach is commonly used: benefits generally must exceed costs as a basic
decision rule.
When the benefits are higher than the costs, it makes sense to make a particular decision
• Behavioral and technical considerations—people are involved in decisions, not just
euros/dollars and cents.
Management control: this calculations have an influence on people’s behavior
The production leader will act different when there are profit targets in his bonussystem
than when there is a cost target in his bonussystem.
• Different costs for different purposes
Position of management accountants within organization structure:
• Line management
E.g. production, marketing, distribution management
Directly responsible for attaining organizational goals
• Staff management
E.g. management accountants, IT, HRM
Provide advice and assistance to line management
• Today: teams, line versus staff is less clear-cut
Line managers= managers in the different functions of your supply chain of your organization
Accountants are in staff management
They can make decisions themselves without asking the line staff management.
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, Professional Ethics
The four standards of ethical conduct for management accountants as advanced by the Institute of
Management Accountants:
• Competence
• Confidentiality
• Integrity
• Objectivity
We assume they are acting on the terms.
They should not share the information with others and should be objective.
Chapter 2: Cost terminology
•General cost terms
•Direct – Indirect (assignment)
•Fixed – Variable (behaviour)
•Product/inventoriable – Period costs (timing expenses)
At which moment do you see de expenses as a cost in your profit and loss account?
• Manufacturing – Marketing etc. (function)
• Total – Unit (level of aggregation)
Different costing (systems) for different purposes
Cost terms
Cost is not the same as ‘cash outflow’ !!!!
• Actual cost = cost incurred (historical, past cost)
• Budgeted cost = predicted or forecasted cost (future cost)
Costs are made to the benefit of a product, service, process, machine, department, business unit
Cost object = anything for which a measurement of costs is desired
Are those costs easy to determine/assign?
Type of cost?, For what department/activity?
How easy is it to assign a cost to a cost object
Registering a cost on number 6 is something else than a cash outflow.
Difference: if you buy materials and didn’t use them yet you put it on the balance sheet and not
by the costs
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