ACCA MA – Chapter 1: Accounting & Management
■ Three Types of Accounting
Financial Accounting → Records overall financial transactions to show profit/loss and financial position for
external users.
Cost Accounting → Analyzes costs of production to control costs and improve efficiency.
Management Accounting → Uses financial & cost data to help managers in planning, controlling, and
decision-making.
Aspect
Financial Accounting
Cost Accounting
Management Accounting
Purpose
Show financial performance & position
Find and control cost of production
Help management in decision-making
Focus
Entire business performance
Cost per unit, cost centers, cost reduction
Planning, controlling, forecasting
Users
External + internal
Mainly internal
Only internal
Time
Past
Past & present
Past, present & future
Nature
Monetary only
Monetary + quantitative
Monetary + non-monetary
■ Data vs Information
Data → Raw facts without meaning (e.g., 120, 300, 250).
Information → Processed data that is meaningful (e.g., Monthly sales: Jan ■120k, Feb ■300k, Mar ■250k).
■■ Attributes of Good Information (ACCURATE)
A – Accurate: Correct and free from errors.
C – Complete: Includes all necessary details.
C – Cost-beneficial: Value > cost to produce.
U – User-targeted: Relevant to the decision-maker.
R – Relevant: Related to the specific decision.
A – Accessible: Easy to obtain.
T – Timely: Available when needed.
E – Easy to understand: Clear, not overly complex.
■ Mission Statement
A mission statement explains why an organization exists and its main direction.
Should be: Clear, inspiring, and guiding for decisions.
4 Key Elements:
Purpose – Why the organization exists.
Strategy – Broad plan to achieve the purpose.
Policies – General rules to guide actions.
Values – Core beliefs and ethics.
■■ Planning
Planning is deciding in advance what to achieve, how, who will do it, and when.
Importance: Sets direction, allocates resources, reduces uncertainty, and provides performance standards.
Level
Who
Time Frame
Focus
Example
Strategic
Top management
3–5+ years
Overall goals & direction
Enter Asian market in 5 years
Tactical
Middle management
1–3 years
Projects to meet strategic goals
Open 3 branches next year
Operational
Supervisors
Daily/weekly
Routine tasks
Weekly staff schedule
■■ Decision-Making & Control
Steps: Identify problem → Gather info → Develop alternatives → Choose best → Implement → Monitor →
Adjust.
Control ensures plans are on track and corrections are made if needed.