Questions and Answers of Financial And Management Accounting

Each member of the group should now make a five-minute presentation evaluating the usefulness of the annual report examined. When the presentations are complete the group should decide on five
Note the pages to which the auditors’ report refers. These are the pages which are regulated by company law, accounting standards and Stock Exchange rules. Compare these pages with the other pages
Find the auditors’ report. To whom is it addressed? What does that tell you about the intended readership of the annual report?
Is there any information in the annual report which would be of interest to suppliers?
Is there any information in the annual report which would be of interest to customers?
Is there any information in the annual report which would be of interest to employees?
Find the financial highlights page. What are the items of accounting information which the company wants you to note? Which users might be interested in this highlighted information, and why?
Look at the contents page. What information does the company provide?
Martin is planning to buy shares in the company that employs him. He knows that the directors of the company are his employers but he wonders what relationship exists between the directors and the
Jennifer has inherited some shares in a public company which has a share listing on the Stock Exchange. She has asked you to explain how she can find out more about the financial position and
Brian and Jane are planning to work in partnership as software consultants. Write a note(100–200 words) to explain their responsibilities for running the business and producing accounting
The following technical terms appear for the first time in this chapter. Check that you know the meaning of each. (If you can’t find them again in the text, there is a glossary at the end of the
Define ‘accounting’ and identify the separate questions raised by the definition. (Section 1.1)
Define the basic terminology of business transactions.
Discuss the usefulness of financial statements to the main users.Additionally, for those who choose to study the supplement:
List the main users of financial information and their particular needs.
Explain the distinguishing features of a sole trader, a partnership and a limited company.
Explain what is meant by a conceptual framework.
Define, and explain the definition of, accounting.
To what extent do the ‘key results’ meet the needs of users of financial statements?
Who might be included in the stakeholders to whom the directors are responsible?
How can management accounting contribute to planning, decision making and control in e-business and e-commerce? (Section 25.7)
What is e-commerce? (Section 25.7)
What is e-business? (Section 25.7)
What are the three goals of business process re-engineering? (Section 25.6)
What is the stated purpose of business process re-engineering? (Section 25.6)
What are the main components of the cost of quality? (Section 25.5)
What is the management philosophy represented by total quality management?(Section 25.5)
What is meant by a cost-reduction approach to value chain analysis? How does it differ from product differentiation? (Section 25.4)
How does just-in-time management reduce costs of control of an inventory of raw materials? (Section 25.3)
How does strategic management accounting make use of information about competitors? (Section 25.2)
Define ‘business strategy’. (Section 25.2)
Explain e-business and e-commerce and outline ways in which management accounting may help in developing business strategies that use e-business methods in general and e-commerce in particular.
Explain total quality management and the cost of quality.
Explain value chain analysis and the role of management accounting.
Explain just-in-time management.
Explain how strategic management accounting is a feature of business strategy.
How is a consideration of competition evident in the strategic decisions taken?
How did management accounting help with strategic decisions in this case?
Explain why present value techniques may not be suitable for project evaluation where a business uses advanced manufacturing technologies. (Section 24.9.2)
Explain what is meant by advanced manufacturing technologies. (Section 24.9)
Explain the processes necessary for authorisation and review of capital projects.(Section 24.8)
Explain the problems which may arise in choosing between mutually exclusive projects. (Section 24.6)
State the internal rate of return decision rule to be used in capital investment appraisal.(Section 24.5.2)
Define internal rate of return and explain how it is calculated. (Section 24.5.1)
State the net present value decision rule to be used in capital investment appraisal.(Section 24.4.2)
Define net present value and explain how it is calculated. (Section 24.4.2)
What is meant by the term ‘discounting’? (Section 24.4.1)
What is meant by the present value of a cash flow? (Section 24.4.1)
What is meant by the time value of money? (Section 24.4.1)
What are the advantages and limitations of the accounting rate of return as a technique for use in capital investment appraisal? (Section 24.3.2)
What is the accounting rate of return? (Section 24.3)
What are the advantages and limitations of the payback method? (Section 24.2.3)
What is the payback method of evaluating a project? (Section 24.2)
What are the main steps in making a decision about a capital investment? (Section 24.1.3)
What is meant by the assumption of certainty of cash flows? (Section 24.1.2)
What is the purpose of capital investment appraisal? (Section 24.1.1)
Explain how advanced manufacturing technologies lead to a demand for new ways of evaluating investment projects.
Explain the control processes applied to investment projects.
Explain which methods of capital investment appraisal are encountered in business practice.
Explain how capital investment appraisal is used to choose from mutually exclusive projects.
Explain and calculate the internal rate of return of a project.
Explain and calculate the net present value of a project.
Explain and calculate the accounting rate of return.
Explain the payback method and calculate the payback period.
Explain the purpose of capital investment appraisal and the role of the management accountant.
How easy is it to carry out an evaluation of the success of an investment project?
What questions would you ask in appraising investment in a railway track or a railway station?
What are the benefits and problems of linking rewards and penalties to a performance measurement system in an organisation? (Section 23.7.3)
Give one example of a goal and one example of a matching measurement, for each of the four main aspects of a Balanced Scorecard. (Section 23.6)
What are the four main aspects of a Balanced Scorecard? (Section 23.6)
Give two examples of qualitative non-financial performance measures. (Section 23.5.2)
Give two examples of quantitative non-financial performance measures. (Section 23.5.1)
Explain the meaning of ‘non-financial performance measures’. (Section 23.5)
Explain what is meant by ‘benchmarking’. (Section 23.4)
What are the behavioural aspects of performance evaluation? (Section 23.3.3)
Define an ‘unavoidable cost’. (Section 23.3.2)
Define an ‘avoidable cost’. (Section 23.3.2)
Define a ‘non-controllable cost’. (Section 23.3.2)
Define a ‘controllable cost’. (Section 23.3.2)
What is required of the management accountant in carrying out performance evaluation?(Section 23.3)
How does an organisation decide on the frequency of internal reporting? (Section 23.2.3)
What are the three basic questions to be asked in relation to report preparation?(Section 23.2)
Define ‘responsibility centre’. (Section 23.1)
Define ‘feedforward control’. (Section 23.1)
Define ‘feedback control’. (Section 23.1)
Understand how management may set standards of performance and reward achievement of standards.
Explain the nature and use of the balanced scorecard.
Explain and give examples of non-financial performance indicators.
Explain the use of benchmarking in performance evaluation.
Explain how performance evaluation is carried out.
Explain the main features of performance reports.
Distinguish feedforward control from feedback control.
How easy would it be to measure the performance of an individual against these targets?
What is the mix of financial and non-financial performance measures mentioned in this extract?
How does the company engage with stakeholders?
How would the ‘performance’ information be viewed by different stakeholders?
Explain the importance of the operating and financial review as a component of the annual report of a company.
Describe and explain other useful information in the annual report that is relevant to analysis of corporate performance.
Relate the interpretation of ratios to the information in a statement of cash flows.

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