1쪽
I N T E R A ADVANCED C T PAPER 7 I V PLANNING, CONTROL AND E PERFORMANCE MANAGEMENT T E X BPP is the official provider of training materials for the ACCA's CAT qualification. This Interactive Text forms part of a suite of learning tools, which also includes CD-ROMs T for tuition and computer based assessment, and the innovative, internet-based Learn Online. This text has been specifically written to the current syllabus and Teaching Guide. • Clear language and presentation ••ThiNganHang.comtechniquesPlenty of questions, examples and quizzes to demonstrate and practiseA question and answer bank prepared by BPP Learning Media authors FOR EXAMS IN JUNE 2009 ThiNganHang.com
2쪽
First edition 2003 Sixth edition June 2008 ISBN 9780 7517 4826 0 (Previous ISBN 9780 7517 3574 1) British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library All our rights reserved. No part of this publication may be Published by reproduced, stored in a retrieval system or transmitted, in BPP Learning Media Ltd any form or by any means, electronic, mechanical, BPP House, Aldine Place photocopying, recording or otherwise, without the prior London W12 8AA written permission of BPP Learning Media Ltd. www.bpp.com/learningmedia We are grateful to the Association of Chartered Certified Printed in the United Kingdom Accountants for permission to reproduce past examination questions. The suggested solutions in the exam answer bank have been prepared by BPP Learning Media Ltd, unless where otherwise stated. Your learning materials, published by BPP Learning Media Ltd, are printed on paperThiNganHang.com sourced from sustainable, managed forests. © BPP Learning Media Ltd 2008 ii ThiNganHang.com
3쪽
Contents Page Introduction How to use this Interactive Text v Approach to examining the syllabus vi Analysis of past papers vi Tackling multiple choice questions viii Part A Cost accounting 1 Accounting for management 3 2 Absorption costing and activity based costing 25 3 Absorption costing and marginal costing compared 47 4 Job, batch, contract, service and process costing 67 Part B Planning and control 5 The collection of data 91 6 Presentation of information 113 7 Forecasting 151 8 Planning and control systems 183 9 The budgetary process 197 10 Making budgets work 237 Part C Standard costing 11 Standard costing 269 12 Variance analysis 283 13 What variances mean 319 Part D Management accounting applications 14 Performance measurement 347 15 Applications of performance measures 371 16 Pricing 395 17 Quality 417 18 Cost management 429 Exam question bank 451 Exam answer bank 465 List of key terms 497 ThiNganHang.comIndex 499 Review form and free prize draw Contents iii ThiNganHang.com
5쪽
How to Use this Interactive Text Aim of this Interactive Text To provide the knowledge and practice to help you succeed in the examination for Paper 7 Planning, Control and Performance Management To pass the examination you need a thorough understanding in all areas covered by the syllabus and teaching guide. Recommended approach (a) To pass you need to be able to answer questions on everything specified by the syllabus and teaching guide. Read the text very carefully and do not skip any of it. (b) Learning is an active process. Do all the questions as you work through the text so you can be sure you really understand what you have read. (c) After you have covered the material in the Interactive Text, work through the Question Bank, checking your answers carefully against the Answer Bank. (d) Before you take the exam, check that you still remember the material using the following quick revision plan. (i) Read through the chapter topic list at the beginning of each chapter. Are there any gaps in your knowledge? If so, study the section again. (ii) Read and learn the key terms. (iii) Look at the exam alerts. These show the ways in which topics might be examined. (iv) Read the chapter roundups, which are a summary of the fast forwards in each chapter. (v) Do the quick quizzes again. If you know what you're doing, they shouldn't take long. This approach is only a suggestion. You or your college may well adapt it to suit your needs. Remember this is a practical course. (a) Try to relate the material to your experience in the workplace or any other work experience you may have had. (b) Try to make as many links as you can to other papers at the Introductory and Intermediate levels. ThiNganHang.com Introduction v ThiNganHang.com
6쪽
Approach to examining the syllabus Paper 7 is a two-hour written paper. The written examination previously consisted of four compulsory questions as follows: Marks Question 1 40 Questions 2-4 (20 marks each) 60 Important note for June 2009 exam From the June 2009 exam, the format of the paper is changing to: Marks 10 multiple choice questions 20 Four compulsory written questions (20 marks each) 80 100 Analysis of past papers These are the topics examined in past papers Topic Dec June Dec June Dec Jun Dec June 2007 2007 2006 2006 2005 2005 2004 2004 Budget statements • • • • ROI, RI • • Balanced scorecard • • • • Benchmarking • ABC • • • Budget and actual profit, • changes for activity, sampling Relevant costing • • • Flexed budgets • • • • • Variance calculations + Standard • • • • • • • • costing Performance ratios • • • • Sales, production, labour, • • materials budgets Incremental costs and revenues • Breakeven, margin of safety, • • ThiNganHang.comCVPSales forecastsValue for money • • • Non-financial indicators • Control charts • Lifecycle costing • • • ZBB • • • • Marginal, absorption costing • • • vi Introduction ThiNganHang.com
7쪽
Topic Dec June Dec June Dec Jun Dec June 2007 2007 2006 2006 2005 2005 2004 2004 Indexing, high-low, linear • • • • regression Target costing • TQM • • Responsibility centres • Questions and answers for all of these sittings can be downloaded from the ACCA website, together with examiner’s comments on the paper. Note that from the June 2009 exam the examiner will be able to cover a wider range of the syllabus at each sitting. Also note that certain topics examined in previous sittings will no longer be examined from June 2009. These topics include decision-making and CVP analysis which are now tested in CAT 10. See page (viii) for how to tackle multiple choice questions. ThiNganHang.com Introduction vii ThiNganHang.com
8쪽
Tackling Multiple Choice Questions MCQ's are now part of all CAT exams. Papers 1 and 2 are examined by CBE, Papers 3 and 4 can be taken by CBE or by a written paper which is 40% MCQs. Paper 5 is now 50% MCQ's and Papers 6-10 are 20% MCQs. All MCQs carry 2 marks. The MCQs in your exam contain four possible answers. You have to choose the option that best answers the question. The three incorrect options are called distracters. There is a skill in answering MCQs quickly and correctly. By practising MCQs you can develop this skill, giving you a better chance of passing the exam. You may wish to follow the approach outlined below, or you may prefer to adapt it. Step 1 Skim read all the MCQs and identify what appear to be the easier questions. Step 2 Attempt each question – starting with the easier questions identified in Step 1. Read the question thoroughly. You may prefer to work out the answer before looking at the options, or you may prefer to look at the options at the beginning. Adopt the method that works best for you. Step 3 Read the four options and see if one matches your own answer. Be careful with numerical questions as the distracters are designed to match answers that incorporate common errors. Check that your calculation is correct. Have you followed the requirement exactly? Have you included every stage of the calculation? Step 4 You may find that none of the options matches your answer. • Re-read the question to ensure that you understand it and are answering the requirement • Eliminate any obviously wrong answers • Consider which of the remaining answers is the most likely to be correct and select the option Step 5 If you are still unsure make a note and continue to the next question Step 6 Revisit unanswered questions. When you come back to a question after a break you often find you are able to answer it correctly straight away. If you are still unsure have a guess. You are not penalised for incorrect answers, so never leave a question unanswered! After extensive practice and revision of MCQs, you may find that you recognise a question when you sit the exam. Be aware that the detail and/or requirement may be different. If the question seems familiar read the requirement and options carefully – do not assume that it is identical. ThiNganHang.com viii Introduction ThiNganHang.com
11쪽
Accounting for management Topic list 1 The management function 2 The management accountant 3 Management information 4 The decision-making process 5 Management accounting information and decision making 6 External information 7 The maintenance and improvement of accounting information systems 8 Cost behaviour ThiNganHang.com 3 ThiNganHang.com
12쪽
Study guide reference Syllabus reference 1(a) Describe the management function within an organisation and how this 1 may vary according to the nature of the business (b) Describe the objectives of management accounting information in relation 1 to short-term and long-term planning, control and performance measurement (c) Describe the role of the management accountant in an organisation 1 (d) Describe the features of useful management information 1 (e) Explain the limitations of management accounting information in providing 1 guidance for managerial decision making (f) Explain how cost accounting systems can be maintained and improved 1 3(c) Explain cost behaviour 1 1 The management function FAST FORWARD Managers have to plan, control, organise, motivate and make decisions. 1.1 The role of management What do managers do? If you are under their control you probably think managers take long lunches, spend long holidays in exotic places and do very little work! If you are a manager, you may believe managers work very hard to ensure the organisation they work for is successful. We are all managers in one sense – managers of our lives. The same management principles apply whether managing your own life, or managing a department. 1.2 You as a manager Imagine your normal working day. Do you wake up each weekday and just hope that you will find some washed and ironed clothes in your wardrobe, that some milk will have magically appeared in your fridge or that a bus might happen to pass that will get you to the office on time? No! You have to plan for these things. They don't just happen. What would happen if you decided to be extremely extravagant and ate at expensive restaurants every night? This might mean that your dream holiday to the Caribbean was no longer affordable. As manager of your life you have to control what you do to ensure that you can stick to your plans. Suppose that you share a house with three other friends. Unless all of you like living in chaos, some sort ThiNganHang.comImagine it is 5.00 pm on Friday afternoon and you really fancy a few drinks in the pub after work. Yourof organisation is necessary to ensure that household duties are shared out equally. If you want to live inordered surroundings you need to organise yourself and others. work colleagues are not keen on the idea. They would rather go home and watch television. How do you get them to do what you want them to do? You try to make them see that it would be better for them if they went to the pub instead of watching television. You need to motivate them. There is one common activity running through the various aspects of managing your life. Making decisions. It is difficult to plan, control, organise or motivate without making decisions. What does managing your life involve? (a) Planning (b) Controlling 4 1: Accounting for management ⏐ Part A Cost accounting ThiNganHang.com
13쪽
(c) Organising (d) Motivating (e) Decision making This is exactly what managers have to do to manage staff, the organisation's products, the organisation's financial position and the organisation's public image. 1.3 Planning Management have to plan for both the short term and the long term. A long-range plan is necessary in order to anticipate any future needs or opportunities that require action to be taken either now or in the near future. For example, management may need to consider building a new factory to meet anticipated increased demand for a product. Management should constantly be thinking ahead. They should never be surprised by any gradual developments. Planning therefore involves converting the organisation's long- term objectives into a succession of short-term plans. One such short term plan is the annual budget. 1.4 Controlling Control is exercised by comparing actual performance with the short-term plans so that deviations from these short-term plans can be identified and corrective action taken. If the control process indicates that the long-term objectives are not achievable, the objectives can be changed before any serious damage to the company's future occurs. 1.5 Organising Organising is the establishment of a framework within which necessary activities can be performed. For example, the designation of a member of staff to be responsible for a particular activity and the definition of managers' responsibilities and lines of authority. It requires the breakdown of the organisation into manageable sections such as departments and the co-ordination of activities in these sections. 1.6 Motivating Managers need to influence employees to act in such a manner that will help achieve the organisation's objectives. 1.7 Decision making Management is decision taking. Managers of all levels within an organisation take decisions Types of decision Detail Strategic level These set or change the objectives or strategic targets of an organisation. They include decisions about the selection of products and markets, the required levels of company profitability and the purchase or disposal of ThiNganHang.comsubsidiary companies or major fixed assets. Tactical level These are concerned with the efficient and effective use of an organisation's resources (sometimes referred to as the '4Ms': men, materials, machines and money). Tactical-level decisions therefore include setting budgets for the next period for sales, production and inventory levels, and setting measures of performance by which departmental results can be gauged. Operational level These are concerned with ensuring that specific tasks are carried out effectively and efficiently. They might include decisions concerning the allocation of particular staff to particular tasks and jobs or the action to take over customer complaints. Part A Cost accounting ⏐ 1: Accounting for management 5 ThiNganHang.com
14쪽
Question Decisions What strategic-level, tactical-level and operational-level decisions might an organisation take in relation to sales? Answer Here is our suggestion. Your answer is likely to be somewhat different. (a) At the strategic level, senior management may decide that the company should increase sales by 5% per annum for at least five years. (b) At the tactical level, the sales director and senior sales managers may decide to increase sales by 5% in the next year, with some provisional planning for future years. This would involve making decisions about direct sales resources, advertising, sales promotion and so on. Sales quotas could be assigned to each sales territory. (c) At the operational level, the manager of a sales territory may make a decision regarding the weekly sales targets for each sales representative. Key terms Planning means formulating ways of proceeding. Decision making means choosing between various alternatives. These two terms are linked: you decide to plan in the first place and the plan you make is a collection of decisions. Control is used in the sense of monitoring something so as to keep it on course, like the 'controls' of a car, not (or not merely) in the sense of imposing restraints, or exercising power over something. Question Planning and control Mr and Mrs Average need to go to Sainsbury's to buy food and other household items. They make a list beforehand which sets out all the things they need. As they go round the supermarket they tick off the items on the list. If any particular item is not available they choose an alternative from the range on the shelves. They also buy a bottle of wine and two bars of chocolate. These were not on their original list. (a) What part or parts of this activity would you describe as planning? (b) There are several examples of decision making in this story. Identify three of them. (c) What part or parts of this activity would you describe as control? Answer We would describe making the list as planning, but making the list is also an example of decision making, since Mr and Mrs Average have to decide what items will go on the list. Ticking off the items is control and ThiNganHang.comchoosing alternatives is 'control action' involving further decision making. You should be able to answer the various parts of this question without further help. 1.8 The effect of the nature of the business on the management function FAST FORWARD The nature of an organisation will affect what the managers do in that organisation. Our description of what management do is very general. In reality, although managers in most organisations will have to plan, control, organise, motivate and make decisions, what they have to plan, control, organise, motivate and make decisions about will be affected by the nature of the organisation in question. 6 1: Accounting for management ⏐ Part A Cost accounting ThiNganHang.com
15쪽
For example, how useful is inflexible long-term planning in an organisation producing a product such as computer software (which has a very short shelf life)? Long term plans can be more easily made in an organisation operating in an older, established industry, where patterns of demand are well known and unexpected occurrences are unlikely. Motivation is more important in a labour-intensive organisation (such as a supermarket chain) than in a machine-intensive organisation (such as a plant in which cars are assembled by robots). The degree of organisation required will depend on the structure and size of the business, and the number of products it produces/services it provides. Organising a huge company which manufactures hundreds of different products in twenty different countries around the world will be far more difficult than organising a small family-run business which produces one product in one factory. Control is vital in all organisations but the way in which control is exercised and the degree of control will vary from organisation to organisation. The control process of standard costing and variance analysis is more suited to certain organisations than others, as we will see later in the text. Most organisations operate a budgetary control system but the sophistication of that system will vary. Larger organisations tend to have more sophisticated control systems but that is not always the case. Managers in all organisations take decisions. Some managers might make decisions which involve millions of pounds (such as whether or not to acquire a subsidiary), others may make decisions which involve only a few pounds (such as whether or not coffee and tea should be free to staff). The type of decision will be affected by what the organisation does: the manager in a hospital may make a decision which fundamentally affects the health of many people; the decision taken by the manager of a company which produces harmful chemicals may take a decision which could affect the environment. Although you can generalise about what managers do, you should now appreciate that every manager's role is unique. Question Management Have a chat with some managers in your organisation. What do they do? Do they plan, control, organise, motivate and make decisions? How do they do this? Why do they do this? Are they successful in what they are doing and if not, why not? 2 The management accountant The management accountant can assist the manager to manage. Assistance in planning The management accountant assists planning by providing information. This information may be about pricing, capital expenditure projects, product costs or competition. In the short-term planning process of ThiNganHang.combudgeting, the management accountant provides information on past costs and revenues which may be used as guidance. The management accountant is also involved in the budgeting process itself. Assistance in controlling The management accountant supplies performance reports which compare actual performance with planned performance and which therefore highlight those activities which are not conforming to plan. Assistance in organising By ensuring that the accounting system is tailored to the organisational structure, the management accountant reinforces the objectives of the organisational framework. Assistance in motivating Budgets prepared by the management accountant serve to motivate managers and subordinates to attempt to achieve the organisation's objectives. Formalised targets are more likely to motivate than vague comments. Part A Cost accounting ⏐ 1: Accounting for management 7 ThiNganHang.com
16쪽
Performance reports produced by the management accountant for the control process also motivate by communicating performance information in relation to the targets which have been set. The management accountant also assists the motivation process by identifying potential managerial problem areas and highlighting those items which require investigation. A poorly designed budgeting process can have the opposite effect and demotivate. Assistance in decision making The management accountant is a vital cog in the organisation's decision-making process. He or she collects and analyses data, and presents information to managers to help in the decision-making process. For example, suppose a component that an organisation currently manufactures in-house can now be purchased from a supplier. The management accountant provides information about the various costs and benefits associated with each option so that management can choose whether to buy-in the component or manufacture it in-house. 2.1 Management accounting Having looked at the role of management accounting in terms of how it can meet the needs of management, we will now look at the discipline in more general terms. The CIMA Official Terminology defines management accounting. Key term Management accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities. The Official Terminology also describes the core activities of management accounting. (a) Participation in the planning process at both strategic and operational levels. This involves the establishment of policies and the formulation of plans and budgets which will subsequently be expressed in financial terms. (b) The initiation of and the provision of guidance for management decisions. This involves the generation, analysis, presentation and interpretation of appropriate relevant information. (c) Contributing to the monitoring and control performance through the provision of reports on organisational (and organisational segment) performance, including comparisons of actual with planned or budgeted performance, and their analysis and interpretation. Along with planning, control and decision making, analysis can also be described as one of the key processes of management accounting. 'This involves gathering data about past, present and planned activities, from both inside and, where relevant, outside of the company. The management accountant's role is to design mechanisms to capture operational data in a cost-effective manner and then to produce ThiNganHang.cominformation in an appropriate form for presentation to management, for example, by producingmonthly management accounts, efficiency studies on production methods and processes, productcosts, etc ...' ('Accounting information systems: roles and processes', ACCA Technician Bulletin, June 2000) FAST FORWARD Management accounting is therefore concerned with the collection of data, its analysis and processing into information, and the interpretation and communication of that information so as to assist management with planning, control and decision making. 8 1: Accounting for management ⏐ Part A Cost accounting ThiNganHang.com
17쪽
Exam focus In an exam, you are unlikely to be asked simply to 'state the functions of management accounting' or to point 'describe the managerial role'. It is more likely that a particular scenario will be provided, as in the activity above, and you will have to 'state the functions' or 'describe the role' with reference to the scenario. And make sure you do refer to the scenario. Apply the general information we have provided to the circumstances of the question. 2.2 Financial accounting 'Financial accounting, can be defined as the periodic reporting of accounting information, as required by statute for shareholders, government agencies (most notably HM Revenue and Customs) and other parties external to the business. As such, various rules and conventions are necessary to ensure consistency between sets of accounts. Financial accounting is predominantly based upon past transactions and events. There is a requirement for companies to prepare three financial statements each year, a income statement, a balance sheet and a cash flow statement. Between them, these statements reveal the monetary performance and value of the company. Without accurate and independently verified accounting statements, it would be very difficult to attract funds for investment from either the inventory market or from financial institutions such as banks or venture capitalists.' This useful summary (with BPP's emphasis) was produced in an article entitled 'Accounting information systems: roles and processes' (ACCA Technician Bulletin, June 2000). 2.3 Management accounting compared with financial accounting You should by now have realised that there are huge differences between financial accounting and management accounting and hence between the information each provides and the value of that information for particular purposes. The following table summarises the main differences between management accounting and financial accounting. Management accounting Financial accounting A management accounting system produces A financial accounting system produces information that is used within an organisation, by information that is used by parties external to the managers and employees. organisation, such as shareholders, banks and receivables. Management accounting helps management to Financial accounting provides a record of the record, plan and control activities and aids the performance of an organisation over a defined decision-making process. period and the state of affairs at the end of that period. There is no legal requirement for an organisation Limited companies must, by law, prepare financial ThiNganHang.comto use management accounting. accounts. Management accounting can focus on specific Financial accounting concentrates on the areas of an organisation's activities. Information organisation as a whole, aggregating revenues and may aid a decision rather than be an end product of costs from different operations. Financial accounts a decision. are an end in themselves. Management accounting information may be Most financial accounting information is of a monetary or alternatively non-monetary. monetary nature. Management accounting provides both an Financial accounting presents an essentially historical record of the immediate past and a historical picture of past operations. future planning tool. Part A Cost accounting ⏐ 1: Accounting for management 9 ThiNganHang.com
18쪽
Management accounting Financial accounting No strict rules govern the way in which Financial accounting must operate within a management accounting operates. The framework determined by law, by IASs, SSAPs management accounts and information are and by FRSs. In principle the financial accounts of prepared in a format that is of use to managers. different organisations can be easily compared. Question Differences Fill in the spaces in the following table. Financial accounting Management accounting Time horizon Principal objectives Report recipients Outputs Regulatory framework Answer This is adapted from 'Accounting information systems: roles and processes', an article in the June 2000 edition of ACCA Technician Bulletin. Financial accounting Management accounting Time horizon Past Past, present and future ThiNganHang.comPrincipalobjectivesReport recipients Stewardship of business for the benefitof shareholdersExternal parties To improve the economy, efficiency andeffectiveness of operationsInternal parties - shareholders - directors - government - company managers Outputs (Usually) annual summaries Detailed monthly and annual management accounts, showing results - Income statement by product and function - balance sheet - cash flow statement 10 1: Accounting for management ⏐ Part A Cost accounting ThiNganHang.com
19쪽
Financial accounting Management accounting Regulatory Accounting concepts (as laid down by None prescribed, although the guidance framework the Accounting Standards Board) plus and formats of CIMA Official statutory requirements of the Terminology tend to be followed in Companies Acts many organisations Question Management accounts Which of the following statements about management accounts is/are true? (i) They must be stated in purely monetary terms (ii) Limited companies must, by law, prepare management accounts (iii) They serve as a future planning tool and are not used as an historical record A (i), (ii), (iii) B (i) and (ii) C (ii) only D None of the statements are correct Answer D Management accounts often incorporate non-monetary measures. Therefore statement (i) is incorrect. There is no legal requirement to prepare management accounts. Therefore statement (ii) is incorrect. Management accounts do serve as a future planning tool, but they are also useful as an historical record of performance. Therefore statement (iii) is incorrect. 3 Management information FAST FORWARD Management information should be relevant, complete, accurate, clear and timely. It should inspire confidence and be communicated to the right manager, manageable in terms of volume, communicated by an appropriate channel of communication and provided at a cost which is less than the benefits it provides. We now know that management accounting involves the collection of data and its analysis and processing into information. 3.1 Data and information Key term ThiNganHang.comWe therefore need to make aData is the raw material for data processing. Data relates to facts, events and transactions and so forth.distinction between data and information. Information is data that has been processed in such a way as to be meaningful to the person who receives it. An example demonstrates the difference. Many companies providing a product or service need to find out about consumer opinion, and employ market research organisations to do so. A typical market research survey employs a number of researchers who request a sample of the public (or the target market) to answer a number of questions relating to the product. Several hundred questionnaires may be completed. Part A Cost accounting ⏐ 1: Accounting for management 11 ThiNganHang.com
20쪽
Individually, a completed questionnaire would not tell the company very much, only the views of one consumer. In this case, the individual questionnaires are data. Once they have been processed, and analysed, the resulting report is information: the company will use this information in decision making. The quality of source data affects the value of information. Information is worthless if the source data is flawed. If the researchers filled in questionnaires themselves, inventing the answers, then the conclusions drawn from the processed data would be wrong, and poor decisions would be made. 3.2 Management information Management information is information used by managers to help control the business. The information provided by the management accountant is therefore management information. 3.3 Useful management information What factors are important for the successful conversion of data to good management information? Features of useful management information (a) It should be relevant for its purpose. (b) It should be complete for its purpose. (c) It should be sufficiently accurate for its purpose. (d) It should be clear to the manager using it. (e) The manager using it should have confidence in it. (f) It should be communicated to the appropriate manager. (g) Its volume should be manageable. (h) It should be timely (in other words communicated at the most appropriate time). (i) It should be communicated by an appropriate channel of communication. (j) It should be provided at a cost which is less than the value of the benefits it provides. Let us have a look at these qualities in a bit more detail. (a) Relevance. Information must be relevant to the purpose for which a manager wants to use it. In practice, far too many reports fail to 'keep to the point' and contain purposeless, irritating paragraphs which only serve to vex the managers reading them. (b) Completeness. An information user should have all the information he needs to do his job properly. If he does not have a complete picture of the situation, he might well make bad decisions. (c) Accuracy. Information should obviously be accurate because using incorrect information could have serious and damaging consequences. However, information should only be accurate enough for its purpose and there is no need to go into unnecessary detail for pointless accuracy. (d) Clarity. Information must be clear to the user. If the user does not understand it properly he cannot use it properly. Lack of clarity is one of the causes of a breakdown in communication. It is therefore important to choose the most appropriate presentation medium or channel of communication. ThiNganHang.com(e) Confidence. Information must be trusted by the managers who are expected to use it. However not all information is certain. Some information has to be certain, especially operating information, for example, related to a production process. Strategic information, especially relating to the environment, is uncertain. However, if the assumptions underlying it are clearly stated, this might enhance the confidence with which the information is perceived. (f) Communication. Within any organisation, individuals are given the authority to do certain tasks, and they must be given the information they need to do them. An office manager might be made responsible for controlling expenditures in his office, and given a budget expenditure limit for the year. As the year progresses, he might try to keep expenditure in check but unless he is told throughout the year what is his current total expenditure to date, he will find it difficult to judge whether he is keeping within budget or not. (g) Volume. There are physical and mental limitations to what a person can read, absorb and understand properly before taking action. An enormous mountain of information, even if it is all 12 1: Accounting for management ⏐ Part A Cost accounting ThiNganHang.com
앞 20페이지만 표시됩니다. 전체를 보려면 자료를 다운로드하세요.
댓글 (0)
댓글이 없습니다. 첫 댓글을 남겨보세요!