CMA Intermediate · Management Accounting · Introduction to Management Accounting
A management accountant at Sundaram Components Ltd. is asked to compare actual results with the budget and report the causes of deviations to the production head. Which function of management accounting is being performed?
The activity is the control function of management accounting. By comparing actual performance with budgeted figures and explaining the variances to the responsible manager, the accountant enables corrective action. Statutory audit, tax return filing and share issue are different activities unrelated to routine variance reporting.
- AStatutory auditing of the financial statements
- BControl through variance reportingCorrect
- CPreparation of the company's income-tax return
- DIssue of shares to the public
Explanation
Comparing actuals with budget and reporting reasons for deviations is the control function, usually done through variance analysis. Auditing, tax filing and share issue are not management accounting functions of this kind.
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