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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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- Management accounting provides economic and financial information for external users such as shareholders, creditors and banks. Select one: True FalseWhich of the following statement is false? 1.Financial Accounting is optional. 2.Management Accounting is used by internal users. 3.Financial Accounting is based on double entry system. 4.Management Accounting is future oriented.Financial statement analysis applies analytical tools to financial statements and related data for making business decisions. True or False True False
- Explain the importance of using financial management for business decisions, and provide examples to support your claims. How do these responsibilities help to inform management decisions, and what would happen if management didn't have this information? This should be a brief paragraph with examples.Indicate whether the following statements about the conceptual framework are true or false. If false, provide a brief explanation supporting your position. a. Accounting rule-making that relies on a body of concepts will result in useful and consistent pronouncements. b. General-purpose financial reports are most useful to company insiders in making strategic business decisions. c. Accounting standards based on personal conceptual frameworks generally will result in consistent and comparable accounting reports. d. Capital providers are the only users who benefit from general-purpose financial reporting. e. Accounting reports should be developed so that users without knowledge of economics and business can become informed about the financial results of a company. f. The objective of financial reporting is the foundation from which the other aspects of the framework logically result.While business decisions should be data-driven and usually involve consideration of quantitative financial information, that doesn't mean that qualitative information is not important as well. The goal of management accounting is to provide relevant information for decision-making. Qualitative considerations require subjective judgement and need multiple opinions. List and discuss 4 examples of such qualitative considerations for both decisions to accept or reject a special order and make or buy decisions.
- Direction: Answer comprehensively the following questions. 1. Explain the shareholder wealth maximization goal of the firm and how it can be measured. Make an argument for why it is better goal than maximizing profit. 2. What conflicts of interest can arise between managers and stockholders? 3. Name and describe as many stockholders as you can. 4. State the kinds of assurances that investors and creditors seek from a firm. 5. What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.Answer of the following question related to these characteristics and constraints. Jeff Brown is evaluating two companies for future investment potential. Jeff’s task is made easier because both companies use the same accounting methods when preparing their financial statements. Which characteristic does the information Jeff will be using possess?What is the accounting equation and discuss how it impacts on the operations of a business? 2. Why is liquidity critical for a business and how might this affect decision making? 3. Why is investment appraisal important to a business? Use examples to support your reasons. 4. What is meant by relevant costs and critically explain their role in decision making. 5. Discuss the benefits of the information contained in the Income Statement/Profit and Loss Account.
- V5. Match the following ____ Complexity in business operations a. Management compensation ____ Timely information b . Accounting procedure that a company ____ Information for control and uses monitoring c. Current and predictive information ____ Differential information d. Need for more specific reports ____ Accounting Policies e. Substantive information that is not in the financial reports f. Financial information must be quantitative g. Financial information not useful in reportsChoose the incorrect statement:a.) The objective of the external financial statements is to communicate the economic effects of completed transactions and other events on the entity.b.) The practice of accounting requires considerable professional judgment.c.) Security analysis use information form financial statements and other sources to projects future earnings.d.) The assessment of earning quality has become an exact science.Accounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision-making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information. Instructions a. Describe briefly the following characteristics of useful accounting information. 1. Relevance. 2. Faithful representation. 3. Understandability. 4. Comparability (consistency). 5. Neutrality. b. b. For each of the following pairs of information characteristics, give an example of a situation in which one of the characteristics may be sacrificed in return for a gain in the other. 1. Relevance and faithful representation. 2. Relevance and consistency. 3. Comparability and consistency.…