FIA Learning philosophy

• Very exam focused

MA1 – Management Information
• Student centred (Student = Customer)

• Assumes no prior knowledge

Lecturer
Dundee Thomas • Real world examples/cases

• Practice exercises
1 2

1 2

About accounting The textbook

The modules in the textbook focus on the

Accounting satisfies a desire to measure what key issues in management accounting.
we've done....

Murray Steele

3 4

3 4

The textbook The textbook

In summary
Topics Covered
• Nature and purpose of management accounting
• The contents of the textbook are the
• Source documents and coding
ingredients on which the examination
• Cost classification and measurement
assessment will be based for this course.
• Recording costs
• Spreadsheets

5 6

5 6

1
 Accounting class Accounting class
The Accounting classes have been In summary
organised to provide students with the
opportunity to develop their understanding • The Course has been designed on the
of the subject areas covered in the course assumption that you know nothing about
text through:
management accounting.
• discussion,
• examples,
• practical exercises,
• past examination questions
7 8

7 8

In summary Class website

• Through the course we shall use reference to
real corporate examples, to illustrate concepts • Notes, course outline and additional resources
and behaviour. are provided via the class website.
https://sbcstt.com/
• This will help cement your learning of
management accounting. • You are expected to print your notes for each
class (when applicable).
• The best way to learn accounting is by applying
its models and theories.

9 10

9 10

The MA1 exam How CBEs work

• The exam is two hours • Questions displayed on the monitor

• 50 Multiple choice questions (100 marks) • You answer directly onto the computer

• All questions are compulsory. • You get your results right away

• You cannot avoid any topic! • Flexible exam date

11 12

11 12

2
 Business organisation
Any Questions? and accounting

13 14

13 14

Users of accounting Types of businesses

• Internal users
• Directors
• Senior executives • Sole Proprietorships
• Managers
• Employees (and trade unions)
•
• Partnerships
• External users
• Shareholders • Corporations
• Analysts
• Creditors
• Tax authorities
• The public
15 16

15 16

Types of businesses Types of businesses

• Sole Proprietorships • Partnerships

Owner of a business which has no Owned by two or more persons who are
partners and no shareholders. personally responsible for all its
liabilities.
The proprietor is personally liable for all
the firm’s obligations. A partnership agreement will set out the
terms of the partnership.

17 18

17 18

3
 Types of businesses Corporation
• As the firm grows, the owner often
• Corporations decides to incorporate.
It is legally distinct from its owners.
• A corporation is legally distinct from its
Owned by stockholders who are not owners.
personally liable for the business’s
liabilities. • It is based on articles of incorporation that
set out the purpose of the business, how
many shares can be issued, the number
of directors to be appointed, etc.
19 20

19 20

Corporation Corporation
• From a legal perspective, the corporation • Corporations have limited liability.
is considered a resident of the This means shareholders cannot be held
state/country. personally liable for the obligations of the
– It can borrow/lend money firm.
– It pays taxes
– It can sue or be sued
The most a stockholder can lose is the
– It cannot vote! amount invested in the stock.

21 22

21 22

Corporate governance
Discussion structure

• The accounting for each business

structure is basically the same

23 24

23 24

4
 Functional Functional
departmentation departmentation

• Functional organisation involves setting up

departments for persons who do similar jobs.

• Eg
– Sales
– Accounting
– Marketing
– Production
– HR

25 26

25 26

Geographical Geographical
departmentation departmentation

• Grouping activities on the basis of territory.

• If an organization's customers are

geographically dispersed, it can group jobs
based on geography

27 28

27 28

Product Product
departmentation departmentation

• Product organisational structure is a framework

in which a business is organised in separate
divisions, each focusing on a different product
or service and functioning as an individual unit
within the company.

• Eg
– Nike

29 30

29 30

5
 Centralisation vs Centralisation vs
decentralisation decentralisation
• Centralisation and decentralisation describe the • Advantages
manner in which decision-making authority is
delegated.

• Centralisation reserves the decision-making

power at top level (and at a single location for
example head office). • Disadvantages

• Decentralisation disperses the decision-making.

31 32

31 32

Policy manual
Accounting equation
A policy manual is a comprehensive text that
details every aspect of company policy, the
procedures for following those policies and the
forms needed to complete each process.
Assets = Liabilities + Capital +
It is a reference tool for managers and
Profit - Drawings
supervisors.

33 34

33 34

Double entry bookkeeping Accounting equation

Double entry system
• For every debit entry there must be a
corresponding credit entry
The double entry system of accounting
• Debit entries means that every business transaction will
– Increase assets and expenses involve two accounts (or more).
– Decrease liabilities and income – For example, when a company borrows
money from its bank, the company's Cash
• Credit entries account will increase and its liability account
– Decrease assets and expenses Loans will increase.
– Increase liabilities and income
35 36

35 36

6
 Accounting equation Types of transactions

Double entry system • Sales

• Purchases
Double entry allows for the accounting • Paying expenses
equation to always be in balance. • Paying employees
• Buying non-current assets

37 38

37 38

Double entry Double entry

bookkeeping bookkeeping

• Sales • Payment by debtors/receivables

– DEBIT Bank/Receivables – DEBIT Bank
– CREDIT Sales – CREDIT Receivables

39 40

39 40

Double entry Double entry

bookkeeping bookkeeping

• Purchase of materials • Payment to creditors/payables

– DEBIT Materials control – DEBIT Payables
– CREDIT Bank / Payables – CREDIT Bank

41 42

41 42

7
 Double entry Double entry
bookkeeping bookkeeping

• Payment of wages • Payment of expenses

– DEBIT Wages expense – DEBIT Expense
– CREDIT Bank – CREDIT Bank

43 44

43 44

Cost ledger accounting Books of prime entry

• Sales day book
Transactions are initially recorded in books of • Sales returns day book
prime entry. • Purchases day book
• Purchases returns day book
• Cash received book
• Cash payments book
• Petty cash book
• Journal

45 46

45 46

Integrated vs
Computerised system
interlocking system
• This is what is typically used today
• Integrated System refers to the accounting
system where a single set of accounts are
prepared for both Management and • Allows for quicker and more accurate entries
Financial accounting.
• Raw data is processed into information
• In Interlocking Systems, two separate set of
accounts are prepared and maintained. • Both manual and computerized processing
can be divided into two categories:
– Batch processing
47
– real-time processing 48

47 48

8
 Real-time or online
Batch processing
processing
• Involves transactions being grouped and
stored before being processed at regular • Involves transactions being input and
intervals. processed immediately.

• The interval can be hourly, daily, weekly or • Discussion???

even monthly. – What type of processing do you think Amazon
uses?
– Are there advantages of one over the other?
• It can result in the system not always being
up-to-date.

49 50

49 50

Any Questions?

51

51