Management Accounting ACCA (MA): Part 1
the main job of management accounting is to help the management in making correct decisions. the role of MA is to make the information out of data. like preparing the total sales and finding optimum sales prices in different regions, out of raw data of the company. the information should be understandable, accessible, timely (update),and relevant.
main managerial Accounting roles:
- Planning: preparation of the budgets and financial plans for the next years.
- Decision making: deciding what minimum selling price should an item have.
- Controling: using variances he should be able to control the deviations from budgets and find the reasons for the deviations.
- Performance Evaluation: to make a business more profitable, we need to have the KPIs to measure to know if we are in the right direction.
This is the long term decision or plans that the companies make. the scope is 5–10 years. like opening a new office in a new country. here we need a lot of the external information, like the peer analysis and competitive analysis.
tactical planning: the plans that are done in a 1 year process. like the company budgeting.
operational planning: this is the day by day planning. planning the hours of works tommorrow. this is mainly based on the internal data.
Comparison of Management accounting and financial accounting.
- is producing the balance sheet and profit statements.
it is required by law.
2. the FA should be provided at least once a year.
3. the report is made for the shareholders and outsiders. although, it can be used by internals as well.
4. the format is provided by law.
- is not a legal duty. it is just designed for managers.
2. although there is no obligation for it, but usually, it is provided monthly.
3. the report is confidential and for internal use.
4. it can be in any format.
Sources of Data:
Primary data: the data that is collected for a specific purpose in the company. this is the data that the company gets for a specific use, and not an external source.
Secondary data: the data that is taken not specifically for a specific reason. like the data that government collects for the demography of the people in the country.
there are different methods for getting the data:
- Random sampling: in this model we randomly select a group of customers out of the whole population which are numbered. in this case there will be a sampling frame.
- Systematic Sampling: for example selecting every hundred person. this is a causi random method, as it is not purely random.
- Stratified Sampling: if you are sampling from two different groups and picking the samples in a way that the proportion is the same as the proportion of the groups. like if you are dealing with a population of 60% men and 40% women. you can make the group into two categories and select 60 cases from the men population group and 40 from women. this a quasirandom sampling.
- Multistage sampling: in this case, if you have already have a 100 offices in your sales, you can initially select 10 randomly and out of that 10, again randomly select.
- Cluster Sampling: take a random sample of 5 offices and then check every thing in the 5 offices.
- Quota sampling: in this case, we want to select 60 men and 40 women like the case of stratified. but instead of selecting randomly, we count from the first sample to sample x for being men or women. if we reached the 60 men, then we just select the women.
Presentation of Information:
component bar chart: is the chart that can be used for showing the sales per department.
Pie chart: can show the information like the country sales comparison.