Chapter 1 Assessment material

1.1 The accounting system should provide information for five broad purposes.
Describe them.

1.2 Distinguish between management accounting and financial accounting.

1.3 Describe the business functions in the value chain.

1.4 Explain the meaning of cost management.

1.5 ‘Knowledge of technical issues such as computer technology is necessary but not
sufficient to becoming a successful accountant.’ Do you agree? Why?

1.6 Peter Drucker, a noted business observer, made the following comment in an
address to management accountants: ‘I am not saying that you do not need a “cop
on the beat”, you do . . . But your great challenge is to get across to your
associates your ability to identify the opportunities – to identify the wealth-
producing characteristics.’ Do you agree? Explain.

1.7 As a new accountant, reply to this comment by a plant manager: ‘As I see it, our
accountants may be needed to keep records for shareholders and for the tax
authorities – but I don’t want them sticking their noses in my day-to-day operations.
I do the best I know how. No pen-pushing bean-counter knows enough about my
responsibilities to be of any use to me.’

1.8 When explaining a motor vehicle market-share turnaround, Citroën stated: ‘We
listened to what our customers wanted and acted on what they said. Good things
happen when you pay attention to the boss.’ How might management accountants
at Citroën apply this same perspective to their own tasks?

1.9 A leading management observer stated that the most successful companies are
those who have an obsession for their customers. Is this statement pertinent to
management accountants? Explain.

1.10 Changes in the way managers operate require rethinking the design and operation
of management accounting systems. Describe five themes that are affecting both
the way managers operate and developments in management accounting.