Question
Which of the following statements is NOT true regarding strategic management accounting (SMA): SMA is a useful tool that helps managers understand the value drivers that create wealth in the business. As an outward-focused tool, SMA ignores competitor analysis. SMA uses management accounting information to support the strategic plans and decisions within a business. Customer profitability analysis is part of SMA as an outward looking approach.
Answer
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Simon
Elite · Tutor for 8 years
Answer
The not-true statement is "As an outward-focused tool, SMA ignores competitor analysis". It contradicts the actual function of SMA being so comprehensive in considering both inter organisational and industry-wide details including competitor's affairs.
Explanation
## Step1: Strategic Management Accounting (SMA) is an analytical tool that assists managers in understanding the processes or activities that generate value for the business. Therefore, the statement "SMA is a useful tool that helps managers understand the value drivers that create wealth" is indeed true. ## Step2:The utilization of SMA extends beyond the financial data companies control internally, but also inclusive external competitions. This includes the analysis of competitors. Therefore, it is wrong to say, "As an outward-focused tool, SMA ignores competitor analysis". ## Step3: SMA uses management accounting information is used in the crafting of strategic plans and making business decisions. This validation articulates to the fact statement "SMA uses management accounting information to support strategic plans and decisions in the business" holds its validity.## Step 4:SMA envisions both inwards and outwards, eliminating solely intra-business decisions. Included is evaluating and monitoring crucial relationships with key customers, giving credence to the saying "Customer profitability analysis, as part of SMA takes an outward looking approach."