CPA Intermediate Level
Management Accounting glossary
Every term this guide defines, A to Z, each with the chapter that teaches it. Open it when a word in a question is unfamiliar, and test yourself on it in the last week: cover the definition and say it in one sentence.
7 terms from the free first chapter
A
- A tool, not a decision
Management accounting informs judgement; it does not replace it, and a manager who follows the numbers without understanding them will be misled by the first assumption that fails.
Taught in The context of management accounting
B
- Behavioural effects
Budgets and standards that are imposed, unrealistic or used to blame produce padding, gaming and resistance rather than control; the numbers change behaviour, not always for the better.
Taught in The context of management accounting
C
- Cost of the system
Detailed costing, budgeting and variance reporting need staff, software and management time; for a small business the cost can exceed the benefit, and the system must be proportionate.
Taught in The context of management accounting
D
- Dependence on financial records
Management accounting reworks the data that financial and cost accounting record; if those records are late, incomplete or wrong, so is the analysis.
Taught in The context of management accounting
E
- Estimates and assumptions
Budgets, standards, cost behaviour and relevant costs rest on forecasts and judgements about the future; the precision of a report can disguise the uncertainty of its inputs.
Taught in The context of management accounting
Q
- Quantifiable factors only
The analysis captures what can be measured in shillings or units; quality, morale, customer goodwill, reputation and strategic position are the 'overriding considerations' the later chapters keep flagging and the report can only note.
Taught in The context of management accounting
S
- Subjectivity of classification
Whether a cost is fixed or variable, direct or indirect, controllable or not, and how overheads are apportioned, are matters of judgement, and different choices give different product costs and different decisions.
Taught in The context of management accounting
The full glossary adds every term from the other 11 chapters, A to Z, each with the chapter that teaches it.