Ensure currency, reliability and validity of data. 4. Classify and code the data according to accounting and organisational principles. 5. Calculate costs, profit and loss and/or breakeven analysis etc where necessary.
Ratios can tell if the business is using its assets appropriately, and if liabilities of the company are well-managed. It shows whether a business can invest in more capital, or if there is room for business growth. It shows whether a business will be able to pay off its debts or their short-term expenses or their daily expenses. It basically shows the strength and weaknesses of the business. It helps for forecasting on making certain financial decisions.
The accounts are assessed base in accordance with the generally accepted accounting principles (GAAP) to ensure they are represented fairly. Tests of Controls The test of controls purpose for the acquisition and payments cycle is for the detection of understatements. Tests of controls for this cycle would include: 1. Verify that correct documents (purchase order, purchase requisition and vendor’s invoice) are prepared and attached to the voucher and examined for existence when submitted to appropriate departments. 2.
Lessons learned from this topic and case study: 1. Managers need to be able to estimate the costs of different responsibility centres and products to assist with monitoring the performance of different departments and also to assist with decision making about product pricing, profitability of individual products, assist with decisions when making changes to product lines and various other managerial requirements such as controlling costs and valuing inventory for financial statements. 2. Dividing the business into cost objects such as departments or products can assist with creating greater accuracy when allocating costs to each ‘cost object’. 3.
How do managerial accountants support strategic decisions? Management accounting is a profession that involves partnering in management decisions, arranging planning to performance management systems, and providing expertise in financial reporting and control to assist in the formulation and implementation of an organization's strategy. Managerial accountants look at a variety of events that happen in and around a business while considering the needs of the business. Once completed data and estimates surface, cost accounting brings the estimates and data into knowledge that will eventually be used to guide decision-making. In managerial accounting, managers use the collected information to get better informed before any decisions are made within their organizations.
4. Monitoring – Ongoing evaluation of internal controls performed on a timely basis. 5. Information and Communication – Relates to the efficiency and reliability of information and communication refers to how the information is presented to communicated to users. |Defining the Control Environment |Yes/No | |Is there a clear method of assigning authority and responsibility?
D. It provides benchmarks for evaluating subsequent performance. 2. The concept of responsibility accounting means that: A. Budgetary data should be reviewed and approved by the budget committee. B.
Trace transactions recorded in the acquisitions journal to supporting documentation, comparing the vendor’s name, total dollar amounts, and authorization for acquisition. This is primarily a test of controls. The purpose is to ascertain if the documentation supporting acquisition transactions are properly recorded. This makes sure that acquisition journal has authorization for purchase, the vendor's name, and the total dollar amounts. So the acquisition entries are supported by adequate information.
It is important to do a thorough review of all performance activities up to the current date. A manager should also take a thorough look at the competition in the capital market. The manager should always know their competitor's business and financing advantages. Using this information, a company can then decide how to gain a momentous advantage
The case narrative describes a business scenario and a problematic performance measurement system. The case requirements ask you to apply performance measurement concepts to interpret production results, evaluate the company’s current performance measurement system, discuss the applicability of the balance scorecard framework for improving the current performance measurement system, construct a balanced scorecard for the company, and then effectively communicate the results of your analysis, evaluation, and recommendations in the form of a professional written memo. 1. Analyze standard cost variance results and deduce likely causes. 2.