BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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creation of value through effective resources use
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information for management planning and control
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cost determination and financial control
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reduction of waste of resources in business processes
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Detailed explanation-1: -Stage 1 is Cost determination and Financial control (prior 1950). The major attention was on determining costs and financial control processes by using financial statements data. Its focus was mainly oriented towards the calculation of product costs.
Detailed explanation-2: -The IFAC’s framework explains the evolution of management accounting in four stages: cost determination (stage 1), generating information (stage 2), cost reduction (stage 3), and value creation (stage 4).
Detailed explanation-3: -The fourth stage or the current evolutionary stage of management accounting had been developed by 1995. The focus of management accounting in this stage moved to the value creation through the effective use of resources and technologies which address customer value, shareholder benefit, and organizational innovation.
Detailed explanation-4: -The focus of management accounting shifted to the provision of information for planning and control purposes in the 1950s and 1960s. In this phase, management accounting is seen by (International Federation of Accountants, 1998) as a management activity, but in a staff role.