Chapter 1

Accounting for Management

Ibrahim Sameer (MBA - Specialized in Finance,
B.Com Specialized in Accounting & Marketing)

www.ibrahimsameer.wordpress.com

Information

What is the difference between Data &

Information?

Information
Data is the raw material for data processing. Data
relate to facts, events and transections and so
forth.
Information is data that has been processed in
such a way as to be meaningful to the person
who receives it. Information is anything that is
communicated.

Information
Qualities of good information
Good information should be relevant, complete,

accurate (not completely accurate or 100%

accurate), clear, it should be inspire confidence,
it should be appropriately communicated, its
volume should be manageable, it should be
timely and its cost should be less than the
benefits it provides.

Planning, Control & Decision

Making
Planning
Information for management is likely to be used for

planning, control and decision making.

Planning involve establishing objectives and
selecting appropriate strategies to achieve
those objectives.
Planning can be short term or long term

Planning, Control & Decision

Making
Objectives of organization
An objective is the intent or aim or goal of an

organization (or an individual). A strategy is a

possible course of action that might enable an
organization (or an individual) to achieve its
objectives.

Planning, Control & Decision

Making
Long term strategic Planning
Long term strategic planning also known as

corporate

planning,

involves

selecting

appropriate strategies so as to prepare a long term

plan to attain the objectives.

Planning, Control & Decision

Making
Short term tactical Planning
Short term tactical planning convert the corporate

planning into a series of short term plans, usually

covering one year, which relate to sections,
functions or department.

Planning, Control & Decision

Making
Decision making
Decision

making

always

involves

choice

between alternatives and it is the role of the

management accountant to provide information so
that management can reach an informed decision.

Anthonys View of Management

Activity
Anthony
strategic

divides
planning,

management
management

activities

into

control

and

operational control.
Management control is concerned with decisions
about the efficient and effective use of an
organizations resources to achieve objectives or
target.

Management Control System

A management control system is a system which
measures

and

corrects

the

performance

of

activities of subordinates in order to make sure that

the objectives of an organization are being met
and the plans devised to attain them are being
carried out.

Types of Information
Information within an organization can be analyzed
into three levels assumed in Anthonys hierarchy
strategic, tactical and operational.

Types of Information
Strategic information is used by senior manger.
Eg: Preparing Strategic Plan of the organization.
Tactical information is used by the middle
management. Eg: Monthly variance report.
Operational information is used by front-line
managers. Eg: Any routine work.

Financial Accounting & Cost &

Management Accounting
Financial accounting systems ensure that the
assets and liabilities of a business are properly
accounted for, and provide information about
profits and so on to shareholders and other
interested parties.
Management

accounting

systems

provide

information specifically for the use of managers

within an organization.

Financial Accounting & Cost &

Management Accounting

Financial Accounting & Cost &

Management Accounting
Cost Accounts
Cost accounting and management accounting are

terms which are often used interchangeably. It is

not correct to do so. Cost accounting is part of
management

accounting.

Cost

accounting

provides a bank of data for the management

accountant to use.

Financial Accounting & Cost &

Management Accounting
Cost accounting is concerned with the following:
Preparing statement (eg: budget, costing)

Cost data collection

Applying costs to inventory, product and services.

Financial Accounting & Cost &

Management Accounting
Management accounting
It is concerned with the following:

Using financial data and communicating it as

information to users.

Questions & Answers

Thank You

Ibrahim Sameer
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