Management Accounting: Information for Creating Value and Managing Resources Essay

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CHAPTER 1

MANAGEMENT ACCOUNTING: INFORMATION FOR CREATING VALUE AND MANAGING RESOURCES
ANSWERS TO QUESTIONS
1.1 There are several possible answers to the question. QANTAS, the national airline of Australia, has faced a number of changes to the business environment in recent years, including deregulation of the domestic aviation industry. This resulted in increased competition as new firms attempted to enter the industry. The most notable of these was two failed attempts by Compass to succeed in the market and gain market share by savagely cutting prices. Its major competitor, Ansett Australia, collapsed in 2001 resulting in QANTAS having almost a monopoly for a short period. A powerful UK airline, Virgin, has also entered the market, …show more content…
The primary source of data for financial accounting information is almost exclusively the organisation’s basic accounting system, which accumulates financial information. Management accounting reports often focus on sub-units within the organisation, such as departments, divisions, geographical regions or product lines. These reports are based on a combination of historical data, estimates and projections of future costs. The data may be subjective and there is a strong emphasis on reporting information that is relevant and timely. Financial accounting reports tend to focus on the enterprise in its entirety. These reports are based almost exclusively on verifiable transaction data. The focus is often on reliability rather than relevance, and the reports are not timely.

1.5

The important differences between management accounting and financial accounting are listed below. (a) (b) (c)

(d)

1.6

The cost accounting system is one part of an organisation’s overall accounting system, the purpose of which is to estimate the cost of goods and services, as well as the cost of organisational units such as departments. Cost information accumulated by the cost accounting system is used for both managerial accounting and financial accounting purposes. Management accounting
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