TG Management Accounting Chapter 16 pdf

TG Management Accounting Chapter 16 pdf - Chapter 16 Cost...

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Chapter 16 Cost Concepts, Cost Behaviour and CVP Analysis 16.1 Chapter Objectives In chapter 1 the term management accounting was introduced. Chapters 16, 17 and 18 provide an introduction to some key management accounting topics. Given this change in emphasis, some mention of how this important area differs from financial accounting is appropriate. Accounting information systems within an organisation have two major subsystems: a management accounting system and a financial accounting system. The principal distinction between the two systems is the targeted user. The management accounting system produces information for internal users, whereas the financial accounting system produces it for external users. Specifically, management accounting identifies, collects, measures, classifies and reports information that is useful to managers in planning, controlling and decision making. It should be emphasised, however, that both the management accounting information system and the financial accounting information system are part of the total accounting information system. When comparing management accounting to financial accounting, some important differences emerge. Management accounting is not subject to the requirements of generally accepted accounting principles. As outlined in chapter 13, the Australian Accounting Standards Board and the Australian Securities Commission develop and monitor the accounting standards that must be followed for external financial reporting. However, there is no official body that prescribes the format, content and rules for preparing internal financial reports. Managers are free to choose whatever information they want, provided it can be justified on a cost-benefit basis. Also, management accounting emphasises the use of accounting information for planning and decision making; because of this, management accounting focuses more on the future than does financial accounting. Financial accounting has a historical orientation – it records and reports what has happened. In this chapter you will learn to: 1. Identify three different organisational categories and describe the role of cost information in each setting. 2. Define basic cost concepts. 3. Classify costs by function. 4. Prepare an absorption-costing profit and loss statement and explain how financial statements differ among manufacturing, service, and merchandising firms. 5. Explain the difference between variable and fixed cost behaviour and prepare a variable- costing profit and loss statement. 6. Identify ways in which cost-volume-profit analysis is used in planning and decision making. 7. Compute the units that must be sold to achieve a targeted level of profit and assess the effects of changes in costs and prices on the profitability of a firm.
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TG Management Accounting Chapter 16 pdf - Chapter 16 Cost...

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