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ACCA F2 - Management Accounting - Interactive Text PDF

674 Pages·2016·8.73 MB·English
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ACCA APPROVED CONTENT PROVIDER FF ACCA approved content provider Mo u An d BPP Learning Media is dedicated to supporting aspiring business professionals / Aa t with top-quality learning material as they study for demanding professional Ci o C n exams, often whilst working full time. BPP Learning Media’s commitment As to student success is shown by our record of quality, innovation and market F in 2 leadership in paper-based and e-learning materials. BPP Learning Media’s study A c materials are written by professionally qualified specialists who know from c o personal experience the importance of top-quality materials for exam success. u n t a n c y Foundations in Accountancy FMA / ACCA Paper F2 Management Accounting This Interactive Text for Foundations in Accountancy In addition to ACCA examining team reviewed FMA Management Accounting and ACCA Paper F2 material you get: M a Management Accounting has been comprehensively n • Chapter activities to test your understanding of the a reviewed by the ACCA examining team. This review g topics covered em guarantees appropriate depth and breadth of content • Key terms extracted from the text and highlighted e and comprehensive syllabus coverage. n in ‘key term’ boxes t A • Exam focus points highlighting ways in which topics cc o might be examined u n • A question and answer bank prepared by BPP tin Learning Media authors g • Iacnodn sq utoic hk iqghuliizgzhets activities, key terms, PER alerts I n • Regular fast forward summaries emphasising the t e key points in each chapter ra c t iv e T ex ACCA Approved t Free access Interactive Text to our Exam Success site Foundations in Accountancy FMA / Contact us ACCA Paper F2 2F Look inside BPP House 0o 1L4o2n-d1o4n4 W Ux12b r8idAgAe Road 16 tor exa Management Accounting United Kingdom 3m TT 0+4844 5( 00)7250 1 810704 0( U2K2)11 (Overseas) 1 Aus fro For exams from 1 September 2016 gm Ebp Lpe.acronmin/[email protected] ust 1 S to 31 August 2017 2e 0p Feburary 2016 17te m £25.00 b e r FI33ST16 (RICOH).indd 1-3 02/02/2016 10:40 ACCA APPROVED CONTENT PROVIDER As the first accredited publisher of ACCA materials, BPP Learning Media has set the benchmark for producing exceptional study materials for students and tutors alike. Our Study Texts, Practice & Revision Kits and i-Passes (for exams on demand) are reviewed by the ACCA examining team and are written by our in-house authors with industry and teaching experience who understand what is required for exam success. EXAM SUCCESS SITE To help maximise your chances of succeeding in your exams, we’ve put together a suite of exclusive ACCA resources. Our Exam Success site provides you with access to a free digital version of this publication, as well as extra resources designed to focus your efforts on exams and study methods. To access the Exam Success site, please email [email protected] with the subject line “Access to Exam Success site - eBook”, including your order reference number and the name of the book you’ve bought (ie ACCA F5 Study Text) for your access code. Once you have received your code, please follow the instructions below: To access the BPP ACCA Exam Success site for this material please go to: www.bpp.com/ExamSuccessSite n Create a user account if you don’t already have one. Make sure you reply to the confirmation email. n Log in using your registered username and password. Select the paper you wish to access. n Enter the code you received when prompted. You will only have to do this once for each paper you are studying. Foundations in I N Accountancy T E FMA R A ACCA C T I Paper F2 V Management Accounting E T E X BPP Learning Media is an ACCA Approved Content Provider for the Foundations in Accountancy qualification. This means we work closely with ACCA to ensure this T Interactive Text contains the information you need to pass your exam. In this Interactive Text, which has been reviewed by the ACCA examination team we:  Highlight the most important elements in the syllabus and the key skills you will need  Signpost how each chapter links to the syllabus and the study guide  Provide lots of exam focus points demonstrating what the examination will want you to do  Emphasise key points in regular fast forward summaries  Test your knowledge of what you've studied in quick quizzes  Examine your understanding in our practice question bank  Reference all the important topics in our full index BPP's Practice & Revision Kit also supports this paper. FOR EXAMS FROM 1 SEPTEMBER 2016 TO 31 AUGUST 2017 F2/FMA MANAGEMENT ACCOUNTING First edition March 2011 A note about copyright Fifth edition January 2016 Dear Customer ISBN 9781 4727 4591 0 (Previous ISBN 9781 4727 3526 3) What does the little © mean and why does it matter? e-ISBN 9781 4727 4632 0 Your market-leading BPP books, course materials and e- learning materials do not write and update themselves. British Library Cataloguing-in-Publication Data People write them on their own behalf or as employees of an A catalogue record for this book is available from organisation that invests in this activity. Copyright law the British Library protects their livelihoods. It does so by creating rights over the use of the content. Published by Breach of copyright is a form of theft – as well as being a BPP Learning Media Ltd criminal offence in some jurisdictions, it is potentially a BPP House, Aldine Place serious breach of professional ethics. 142-144 Uxbridge Road London W12 8AA With current technology, things might seem a bit hazy but, basically, without the express permission of BPP Learning www.bpp.com/learningmedia Media:  Photocopying our materials is a breach of copyright Printed in the United Kingdom by Ricoh UK Limited  Scanning, ripcasting or conversion of our digital Unit 2 materials into different file formats, uploading them to Wells Place Facebook or emailing them to your friends is a breach Merstham of copyright RH1 3LG You can, of course, sell your books, in the form in which you have bought them – once you have finished with them. (Is this fair to your fellow students? We update for a reason.) Please note the e-products are sold on a single user licence Your learning materials, published by BPP basis: we do not supply 'unlock' codes to people who have Learning Media Ltd, are printed on paper bought them secondhand. obtained from traceable sustainable sources. And what about outside the UK? BPP Learning Media strives to make our materials available at prices students can afford All rights reserved. No part of this publication may by local printing arrangements, pricing policies and be reproduced, stored in a retrieval system or partnerships which are clearly listed on our website. A tiny transmitted in any form or by any means, minority ignore this and indulge in criminal activity by electronic, mechanical, photocopying, recording or illegally photocopying our material or supporting otherwise, without the prior written permission of organisations that do. If they act illegally and unethically in BPP Learning Media. one area, can you really trust them? We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions. The suggested solutions in the practice answer bank have been prepared by BPP Learning Media Ltd. © BPP Learning Media Ltd 2016 ii CONTENTS Contents Page Introduction Helping you to pass.......................................................................................................................v Chapter features...........................................................................................................................vi Studying F2/FMA.........................................................................................................................vii The Computer Based Examination...............................................................................................xviii Tackling Multiple Choice Questions................................................................................................xix Part A The nature, source and purpose of management information 1 Accounting for management...................................................................................................3 2 Sources of data...................................................................................................................19 3 Cost classification...............................................................................................................37 4 Cost behaviour...................................................................................................................55 5 Presenting information.........................................................................................................75 Part B Cost accounting techniques 6 Accounting for materials......................................................................................................99 7 Accounting for labour........................................................................................................133 8 Accounting for overheads...................................................................................................155 9 Absorption and marginal costing.........................................................................................185 10 Job, batch and service costing............................................................................................199 11 Process costing.................................................................................................................221 12 Process costing, joint products and by-products...................................................................251 13 Alternative costing principles..............................................................................................265 Part C Budgeting 14 Forecasting .....................................................................................................................285 15 Budgeting........................................................................................................................331 16 The budgetary process.......................................................................................................359 17 Making budgets work........................................................................................................393 18 Capital expenditure budgeting............................................................................................409 19 Methods of project appraisal..............................................................................................417 Part D Standard costing 20 Standard costing...............................................................................................................445 21 Cost variances..................................................................................................................455 22 Sales variances and operating statements............................................................................481 Part E Performance measurement 23 Performance measurement................................................................................................501 24 Applications of performance measurement...........................................................................545 Practice question bank.........................................................................................................................573 Practice answer bank...........................................................................................................................599 Appendix: Mathematical tables............................................................................................................625 Index.....................................................................................................................................................631 Review form iii F2/FMA MANAGEMENT ACCOUNTING iv INTRODUCTION Helping you to pass BPP Learning Media – Approved Content Provider As ACCA's Approved Content Provider, BPP Learning Media gives you the opportunity to use study materials reviewed by the ACCA examination team. By incorporating the examination team's comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Interactive Text provides excellent, ACCA-approved support for your studies. The PER alert! To become a Certified Accounting Technician or qualify as an ACCA member, you not only have to pass all your exams but also fulfil a practical experience requirement (PER). To help you to recognise areas of the syllabus that you might be able to apply in the workplace to achieve different performance objectives, we have introduced the 'PER alert' feature. You will find this feature throughout the Interactive Text to remind you that what you are learning in order to pass your Foundations in Accountancy and ACCA exams is equally useful to the fulfilment of the PER requirement. Tackling studying Studying can be a daunting prospect, particularly when you have lots of other commitments. The different features of the Interactive Text, the purposes of which are explained fully on the Chapter features page, will help you while studying and improve your chances of exam success. Developing exam awareness Our Interactive Texts are completely focused on helping you pass your exam. Our advice on Studying F2/FMA outlines the content of the paper and the recommended approach to studying and any brought forward knowledge you are expected to have. Exam focus points are included within the chapters to highlight when and how specific topics might be examined. Using the Syllabus and Study Guide You can find the Syllabus and Study Guide on pages ix – xvii of this Interactive Text. Testing what you can do Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can recall what you have learnt. We include Questions – lots of them – both within chapters and in the Practice Question Bank, as well as Quick Quizzes at the end of each chapter to test your knowledge of the chapter content. v F2/FMA MANAGEMENT ACCOUNTING Chapter features Each chapter contains a number of helpful features to guide you through each topic. Topic list Tells you what you will be studying in this chapter and the relevant section numbers, together with the ACCA syllabus references. Introduction Puts the chapter content in the context of the syllabus as a whole. Study Guide Links the chapter content with ACCA guidance. Fast Forward Summarises the content of main chapter headings, allowing you to preview and review each section easily. EXAMPLE Demonstrates how to apply key knowledge and techniques. Key Term Definitions of important concepts that can often earn you easy marks in exams. Exam Focus Tells you how specific topics may be examined. Point Formula Formulae which have to be learnt. PER Alert This feature gives you a useful indication of syllabus areas that closely relate to performance objectives in your Practical Experience Requirement (PER). Question Gives you essential practice of techniques covered in the chapter. Chapter Roundup A full list of the Fast Forwards included in the chapter, providing an easy source of review. Quick Quiz A quick test of your knowledge of the main topics in the chapter. Practice Question Bank Found at the back of the Interactive Text with more exam- style chapter questions. Cross referenced for easy navigation. vi INTRODUCTION Studying F2/FMA How to use this Interactive Text Aim of this Interactive Text To provide the knowledge and practice to help you succeed in the examination for Paper F2/FMA Management Accounting. To pass the examination you need a thorough understanding in all areas covered by the syllabus and teaching guide. Recommended approach (a) To pass you need to be able to answer questions on everything specified by the syllabus and teaching guide. Read the Text very carefully and do not skip any of it. (b) Learning is an active process. Do all the questions as you work through the Text so you can be sure you really understand what you have read. (c) After you have covered the material in the Interactive Text, work through the Practice Question Bank, checking your answers carefully against the Practice Answer Bank. (d) Before you take the exam, check that you still remember the material using the following quick revision plan. (i) Read through the chapter topic list at the beginning of each chapter. Are there any gaps in your knowledge? If so, study the section again. (ii) Read and learn the key terms. (iii) Look at the exam focus points. These show the ways in which topics might be examined. (iv) Read the chapter roundups, which are a summary of the fast forwards in each chapter. (v) Do the quick quizzes again. If you know what you're doing, they shouldn't take long. This approach is only a suggestion. You or your college may well adapt it to suit your needs. Remember this is a practical course. (a) Try to relate the material to your experience in the workplace or any other work experience you may have had. (b) Try to make as many links as you can to other papers at the Introductory and Intermediate levels. For practice and revision use BPP Learning Media's Practice & Revision Kit, iPass and Passcards. vii F2/FMA MANAGEMENT ACCOUNTING What F2/FMA is about The aim of this syllabus is to develop a knowledge and understanding of the principles and techniques used in recording, analysing and reporting costs and revenues for internal management purposes. It covers management information, cost recording, costing techniques, budgeting and performance measurement. Approach to examining the syllabus Paper F2/FMA is a two-hour paper. It can be taken as a written paper or a computer based examination. The computer based examination contains 35 objective test questions – multiple choice, number entry and multiple response and 3 longer style multi-task questions. (See page xvi for frequently asked questions about computer based examinations.) The written examination is structured as follows. Number of marks Section A 35 compulsory multiple choice questions of two marks each 70 Section B 3 compulsory multi-task questions of ten marks each, one from each of syllabus areas C, D and E 30 100 The balance of questions in Section A reflects the weightings in Section B, so as to preserve the overall balance of the paper. The June 2015 examiner's report (found on the ACCA website) advised students to:  Study the whole syllabus, because the paper will cover the full syllabus  Practise as many questions as possible  Read questions very carefully in the examination  Try to attempt the 'easy' examination questions first  Not to spend too much time on apparently 'difficult' questions  Attempt all questions in the examination (there are no negative marks for incorrect answers)  Read previous Examiner's Reports  For paper exams, present Section B answers as tidily as possible  Read Student Accountant viii

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