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Cima case study practicing

The document discusses the roles of management and cost accounting in enhancing shareholder value and decision-making within organizations. It contrasts management accounting, which focuses on strategic, long-term decisions using both historical and future data, with financial accounting, which is more narrowly defined, focusing on historical data for external stakeholders. Additionally, it outlines different levels of decision-making within organizations, from operational to tactical and strategic levels.

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Bokang Junior Kgari
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46 views

Cima case study practicing

The document discusses the roles of management and cost accounting in enhancing shareholder value and decision-making within organizations. It contrasts management accounting, which focuses on strategic, long-term decisions using both historical and future data, with financial accounting, which is more narrowly defined, focusing on historical data for external stakeholders. Additionally, it outlines different levels of decision-making within organizations, from operational to tactical and strategic levels.

Uploaded by

Bokang Junior Kgari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Cima case study practicing

Cost accounting
Management accounting plays a vital role pertaining protecting, preserving,
creating and increasing value for shareholders. Management accounting is the
application of accounting and financial management principles that aid in
creating, protecting, preserving and increasing the value of shareholder wealth in
profit and for non-profit organisations and both public and private sector.
Whereas cost accounting is a subset for management accounting whereby costs
are gathered and attached to <cost objects> and establishment of budgets,
setting of standard costs and actual costs for products, services, processes and
operations as well as analysing variances and profitability or social use of funds.

Within the organisation they are different levels of decision making. One of the
levels of decision making is operational decision making which is entangled of low
level <managers> who are managing < resources> in a day-to-day operation. They
are involved in activities like employing <staff, managing inventory>. We also have
tactical level decisions which are employed by <middle-level managers > who are
mostly responsible for allocating sufficient resources to the low-level mangers.
The decisions are made in the medium-term bases. They make decisions such as
<staff recruitment, purchasing of machines>.

At higher level or at the top of the organisation we have high level managers
referred to as senior managers who are mostly involved in the organisation
strategy. The decision at this level is long term based. The focus at this level is
deciding on which <products> to be launch which <market> should we operate in
and analysing and scanning other external factors that affect the organisation
<politically economically > etc.
Comparison between management accounting and financial accounting

The role of a financial accountant is much more clearly defined and narrower than
that of a management accountant. The role of a financial accountant is mostly
focused on historical data where the main objective is to produce financial
statements which represents true and fair view of the organisation performance.
The way in which financial accountants present information is guided by
principles and standards which are also legally enforced and required by the law.
The financial statements are prepared for external use by <stakeholders>.

Whereas management accountants role take a broader view of the organisation


and take decisions that include a more strategic basis with a long term view.
Management accounts are used internally by the internal managers. They both
utilise historic and future financial and non-financial information, qualitative and
non- qualitative information. The presentation of information is not governed by
rules and regulations and can be presented in any formats. Basically the
information is provided to the management to aid in decision making.

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