Solutions Manual For Accounting For Managers Interpreting Accounting Information for Decision Making 4e Paul M. Collier

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Solutions Manual For Accounting For Managers Interpreting Accounting Information for Decision Making 4e Paul M. Collier-1.1 Explain the difference between accounting, an account, and accountability. ... Accounting is a collection of systems and processes used to record, report and interpret business transactions. An account is an explanation or report in financial terms about those transactions. Accountability arises from the stewardship function, that managers have to provide an account to other stakeholders in the business. 1.2 Summarise the main activities of management accountants. The main activities of management accountants includes participation in planning, primarily through budgets; generating, analysing, presenting and interpreting information to support decision-making, and monitoring and controlling performance. 1.3 Explain how the role of management accounting has changed over the last 100 years. The origin of management accounting was cost accounting in factories, where accountants were close to the business and advised non-financial managers. Management accountants have advised on economies of scale as well as of scope as businesses grew and diversified as divisionalization, conglomerates and multinational organizations increased the demand for accounting information. Non-financial performance information has come to challenge management accounting information. Although new techniques have been developed, new manufacturing technologies and the growth of service industries has not been matched by the changing role of management accountants. Management accounting is increasingly decentred in organizations, with IT carrying out the bulk of routine transaction processing. Organizations are increasingly looking for management accountants to use their financial expertise to contribute to strategy formulation and implementation. Chapter 2 Solutions 2.1 Explain the idea of value-based management and how shareholder value relates to the interaction between product and capital markets. Value-based management uses a variety of techniques to measure increases in shareholder value, which is assumed to be the primary goal of all business organizations. Shareholder value refers to the economic value of an investment by discounting future cash flows to their present value using the cost of capital for the business. To achieve shareholder value, a business must generate profits in their markets for goods and services (product markets) that exceed the cost of capital (the weighted average cost of equity and borrowings) in the capital market. 2.2 Explain the key issues in corporate governance as they relate to accounting. The responsibilities of the Board include setting the company’s strategic goals, providing leadership to senior management, monitoring business performance and reporting to shareholders. The last two of these explicitly relate to accounting, and the first two implicitly do so. In the UK the Combined Code and in the US the Sarbanes-Oxley Act include important responsibilities of the Board in relation to financial statements and performance management. The role of a Board is to provide leadership of the company within a framework of prudent and effective controls which enables risk to be assessed and managed. These controls include many accounting controls including budgets, capital expenditure evaluations, etc. The financial reports of a company are the responsibility of the Board which must ensure that the company keeps proper accounting records which disclose with reasonable accuracy the financial position of the company at any time and ensure that financial reports comply with the Companies Act. The Board is also responsible for safeguarding the company’s assets and for taking reasonable steps to prevent and detect fraud. [Show More]

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