Chapter 15

Introduction to management accounting

‘Jones was loyal to his staff, and diplomatic, but clearly had been bewildered by what he found when he arrived. “Well, we've only just got an audited balance sheet [statement of financial position] for 1998,” he said, “We just don't have any contemporary operating or financial data on which to make management decisions in this airline at the moment. It's the old garbage-in, garbage-out syndrome.” ’

Graham Jones commenting on the Greek airline company, Olympic AirlinesSource: Matthew Gwyther, Icarus Descending, Management Today, January 2000, pp. 52–3.


Learning Outcomes

After completing this chapter you should be able to:

  • Explain the nature and importance of management accounting.
  • Outline the relationship between financial accounting and management accounting.
  • Explain the main branches of cost accounting and decision making.
  • Discuss cost minimisation and revenue maximisation.
  • Understand some of the major terms used in management accounting.

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Chapter Summary

  • Management accounting is the provision of accounting information to management to help with costing, with planning, control and performance and with decision making.
  • Whereas the main ...

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