Answer any three from the following: a) Write any two characteristics of management accounting. b) What do you mean by material price variance? c) Mention two limitations of ratio... Answer any three from the following: a) Write any two characteristics of management accounting. b) What do you mean by material price variance? c) Mention two limitations of ratio analysis. d) Mention two distinctions between fixed budget and flexible budget. e) Write two distinctions between cost and management accounting. Answer any two from the following: a) Describe briefly any five requisites for a successful budgetary control system. b) Write any five limitations of Financial Statement analysis. c) Briefly explain any five advantages of standard costing. d) Mention five managerial uses of ratio analysis.
Understand the Problem
The question is asking for definitions and explanations related to management accounting and financial analysis, specifically addressing characteristics, limitations, and distinctions in the field. It also requires various management accounting concepts such as variance and budgeting.
Answer
Management accounting aids decision-making. Material price variance: actual vs. standard cost difference. Ratio analysis limits: qualitative insight, historical data reliance. Budget control needs clear objectives. Financial statements: history-based, no inflation. Ratio analysis: financial stability, profitability.
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Answer any three: a) Characteristics of management accounting include decision-making facilitation and future planning. b) Material price variance is the difference between the actual cost of materials and the standard cost. c) Limitations of ratio analysis: can't provide qualitative insights and may rely on historical data.
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Answer any two: a) Requisites for budgetary control include clear objectives and effective communication. b) Limitations of financial statement analysis: does not account for inflation and based mainly on historical information. c) Advantages of standard costing: cost control and performance evaluation. d) Uses of ratio analysis: financial stability evaluation and profitability assessment.
Answer for screen readers
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Answer any three: a) Characteristics of management accounting include decision-making facilitation and future planning. b) Material price variance is the difference between the actual cost of materials and the standard cost. c) Limitations of ratio analysis: can't provide qualitative insights and may rely on historical data.
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Answer any two: a) Requisites for budgetary control include clear objectives and effective communication. b) Limitations of financial statement analysis: does not account for inflation and based mainly on historical information. c) Advantages of standard costing: cost control and performance evaluation. d) Uses of ratio analysis: financial stability evaluation and profitability assessment.
More Information
Management accounting and cost variance analysis are crucial tools for understanding financial efficiency and informing strategic decisions. Ratio analysis provides a quantitative look at financial performance but lacks qualitative assessment.
Tips
Ensure not to confuse material price with quantity variances. Recognize that ratio analysis cannot predict future conditions.
Sources
- Management Accounting Concepts and Techniques - scholarsarchive.library.albany.edu
- 8.2 Compute and Evaluate Materials Variances - OpenStax - openstax.org
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