Strategic management accounting is concerned with providing information that will
support the strategic plans and decisions made within a business. We saw in Chapter 1
that strategic planning involves five steps:
1 Establishing the mission and objectives of a business.
2 Undertaking a position analysis, such as a SWOT (strengths, weaknesses, opportun-
ities and threats) analysis, to establish how the business is placed in relation to its
environment.
3 Identifying and assessing the possible strategic options that will lead the business
from its present position (identified in Step 2) to the achievement of its objectives
(identified in Step 1).
4 Selecting the most appropriate strategic options (from those identified in Step 3) and
formulating long- and short-term plans to pursue them.
5 Reviewing business performance and exercising control by assessing actual perform-
ance against planned performance (identified in Step 4).
To some extent, conventional management accounting already supports this stra-
tegic process. We have seen in Chapter 7, for example, how budgets can be used to
compare actual performance with earlier planned performance. We have also seen in
Chapter 8 the role of investment appraisal techniques in evaluating long-term plans.
Nevertheless, there is scope for further development. It can be argued that if manage-
ment accounting is fully to support the strategic planning process, it must develop in
three broad areas:
l It must become more outward looking. There is general agreement that the conven-
tional approach to management accounting does not give enough consideration to
external factors affecting the business. These factors, however, are vitally important
to strategic planning and decision making. For example, we need to understand
the environment within which the business operates when we are undertaking
a position analysis or when we are formulating plans for the future. Management
What is strategic management accounting?
CHAPTER 9 STRATEGIC MANAGEMENT ACCOUNTING
318

hensive range of performance measures to try to ensure that the objectives of the
business are being met. The objectives of a business are often couched in both finan-
cial and non-financial terms and so the measures developed must reflect this fact.
Let us now turn our attention to the ways in which management accounting can
help in each of the three areas identified.
If a business is to thrive, it needs to have a good understanding of the environment
within which it operates. In particular, it should have a good understanding of the
threat posed by its competitors and the benefits obtained from its customers. There is
a strong case for reporting certain information relating to competitors and customers,
frequently and routinely to managers. By so doing, managers can respond more
quickly to any changes in the environment that may occur. In this section we consider
some of the techniques and measures that may help managers gain a better under-
standing of these two important groups.
Competitor analysis
To compete effectively, a business needs to acquire a sound knowledge of its main
competitors. As well as helping in strategic planning, this knowledge can also help in
pricing and business acquisition decisions. When appraising competitors, a business
needs to understand
l what strategies and plans they have developed;
l how they may react to the plans the business has developed; and
l whether they have the capability to pose a serious threat to the business.
To gain this understanding, a careful analysis of each main competitor should be
carried out.
To illustrate the benefits of competitor analysis, let us say that a business proposes
to reduce its sales prices by 10 per cent. What would be the reaction of competitors?
Facing outwards
FACING OUTWARDS
319
‘
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We shall now consider some of these and, given the management accounting focus of
CHAPTER 9 STRATEGIC MANAGEMENT ACCOUNTING
320
REAL WORLD 9.1
Angling for recovery
House of Hardy is a world-famous manufacturer of fishing rods and tackle. It enjoys an
unrivalled reputation for its products and has a highly skilled workforce. In recent years,
however, it has experienced problems, which have been partly caused by global competi-
tion. The business is trying to recover and, in analysing its past mistakes, has recognised
that it has been rather too complacent in its approach to competitors. As part of its recov-
ery plan it is now paying much more attention to what they are doing. It is now analysing
the products offered by competitors and reviewing its own pricing policies in an attempt
to compete more effectively.
Source: Based on information from ‘How Hardy lost the lure of heritage’, ft.com, 1 December 2003.
FT
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this book, will concentrate on those sources providing information about the financial
resources and capabilities of competitors.
A useful starting point is to examine a competitor’s annual report. In the UK, all lim-
ited companies are legally obliged to provide information about their business in an
annual report that is available to the public. Similar provisions relate to limited com-
panies in most countries in the world. The income statement, cash flow statement and
statement of financial position (balance sheet) found in the annual report of a com-
petitor can be examined to gain insights about its financial performance and position.
Financial ratios may be used to help gain an impression of the profitability, liquidity,
efficiency and financing arrangements of the business. Trends may be detected over
time and particular strengths and weaknesses identified.
Where the competitor is not the whole business, but simply an operating division,
the annual reports are likely to be less helpful. This is because the results of the relev-

profile of competitors. These agencies normally rely on the kind of information sources
described above.
Of particular value to the business is knowledge of its competitors’ cost structures
in terms of the extent to which costs are fixed and variable. This would enable the
business to make some estimate of the effect on the competitors’ profit of an increase
or decrease in sales volume. This might, in turn, enable the business to assess how well
placed each competitor might be to react to a change in sales volume and/or sales
price. For example, a competitor with a high level of fixed costs (high operating gear-
ing) and, consequently, a low margin of safety may not be able to withstand a down-
turn in sales volume as comfortably as another business with lower operating gearing.
Real World 9.2 concludes this section by revealing that many businesses are not alert
to the moves made by competitors and so fail to gain competitive advantage.
CHAPTER 9 STRATEGIC MANAGEMENT ACCOUNTING
322
REAL WORLD 9.2
Too little, too late
A global survey of 1,825 business executives by McKinsey, the management consultants,
found that businesses were not as active as they should be in responding to competitive
threats or monitoring the behaviour of competitors. The survey asked executives how their
businesses responded to either a significant change in prices or to a significant change in
innovation. The answers of executives were strikingly similar across regions and industries.
A majority of executives stated that their businesses found out about the competitive
move too late to respond before it hit the market. Thirty-four per cent of those facing an
innovation threat and 44 per cent of those facing a pricing change said that they found out
about the competitors’ moves either when they were announced or when they actually hit
the market. An additional 20 per cent of the respondents facing a price change didn’t find
out until it had been in the market place for at least one or two reporting periods.
These findings suggest that businesses are not conducting an ongoing, sophisticated
analysis of their competitors’ potential actions. That view was supported by the execu-
tives’ responses to questions on how they gather information about what competitors

material delivery policy. This can require deliveries to be made frequently and at
short notice, in effect putting pressure on the supplier to hold higher inventories
levels. (We shall discuss ‘just-in-time’ inventories management in more detail in
Chapter 11.)
l Offering credit. The business will have to finance any credit allowed to its customers.
This could vary from customer to customer, depending on how promptly they pay.
l After-sales support. Technical assistance or servicing may be offered as part of the
sales agreement.
These customer-related costs are probably best determined using an activity-based
costing approach to cost allocation. This means that, once customer-related costs are
identified, cost drivers must be established and appropriate cost driver rates deduced.
FACING OUTWARDS
323
‘
Imam plc identified the following costs relating to its customers:
l Order handling
l Invoicing and collection
l Shipment processing
l Sales visits
l After-sales service.
Suggest a possible cost driver for each of the items identified.
Activity 9.1
‘
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Once customer-related costs are derived, a CPA statement, which is essentially an
abbreviated income statement, can be produced for each customer and/or type of
customer. The CPA statement will show the relevant sales revenues and, in addition
to the customer-related costs identified earlier, will include the basic cost of creating
or buying-in the goods or services supplied (that is, cost of goods sold) and any

Invoicing and collection Number of invoices sent
Shipment processing Number of shipments made
Sales visits Number of sales visits made
After-sales service Number of technical support visits made
These are only suggestions. Other factors may be found that drive each cost.
Activity 9.1 continued
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FACING OUTWARDS
325
Customer
A plc B plc C plc D plc
%%%%
Gross profit 100.0 100.0 100.0 100.0
General selling and administrative costs 50.0 47.8 50.0 50.0
Customer-related costs
Order handling 10.5 8.7 8.3 9.1
Invoicing and collection 10.5 8.7 8.3 9.1
Shipment processing 15.8 17.4 16.7 18.2
Sales visits 18.4 4.3 4.2 4.5
After-sales service 15.8 – 4.2 –
Profit/(loss) for the month (21.0) 13.0 8.3 9.1
100.0 100.0 100.0 100.0
The information generated shows that one customer, A plc, is generating a loss.
To find out whether this is a persistent problem, trend analysis can be undertaken
which plots the customer-related costs as a percentage of gross profit over time.
An example of a trend analysis for A plc is shown in Figure 9.2.
Trend analysis for A plc
Figure 9.2
The trend in customer-related costs is shown as a percentage of gross profit for A plc,

A survey by Tayles and Drury, which elicited responses from 185 management account-
ants in UK businesses, gives some insight into the extent and frequency of customer pro-
fitability analysis. The key findings are shown in Figure 9.3.
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Many businesses try to compete on price: that is, they try to provide goods or services
at prices that compare favourably with those of their competitors. To do this success-
fully over time, they must also compete on costs: lower prices can only normally be
sustained by lower costs. A strategic commitment to competitive pricing must there-
fore be accompanied by a strategic commitment to managing the cost base.
In Chapter 5 we saw that, to manage costs in an active way, new forms of costing
have been devised. Some of these new costing techniques reflect a concern for long-
term cost management and so fall within the broad scope of strategic management
accounting. Total life-cycle costing, target costing and kaizen costing provide three
examples. In this section, we shall briefly review these forms of costing and then go on
to consider other ways in which costs may be strategically managed.
Competitive advantage through cost leadership
COMPETITIVE ADVANTAGE THROUGH COST LEADERSHIP
327
We can see that there are wide variations to be found in practice. Whereas nearly half
the respondents undertake CPA on a monthly basis, nearly a quarter do not undertake
CPA analysis at all.
Source: Based on information in Tayles, M. and Drury, C., ‘Profiting from profitability analysis?’, University of Bradford Working Paper
series No. 03/18, June 2003, p. 8.
Extent and frequency of customer profitability analysis
Figure 9.3
Approximately three-quarters of respondents indicated that CPA was undertaken, with a
monthly analysis being the most common.
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efficiency, together with reduced emissions and noise.
Our products typically remain in service for many years and consequently much of our busi-
ness is directed towards the whole life cycle of the product. Our product development processes
have evolved to address issues associated with manufacturing, assembly, operation, repair and
overhaul. This approach has much in common with the concept of Design for Environment (DfE)
which is a process for designing to minimise the overall impact of the product during its whole
life. . . .
We are also using Life Cycle Analysis techniques to benchmark the total environmental impact
associated with our products and ultimately to inform our decision-making processes. This
approach has proved the importance of the ‘in service’ phase of the life cycle for our products,
when the vast majority of the environmental impacts occur. Rolls-Royce has long applied life-cycle
management in the form of life-cycle costing to products. We incorporate environmental life-cycle
thinking into our design processes alongside cost measurement to ensure that our products are
the most cost-effective solutions while protecting the environment as far as possible.
Source: rolls-royce.com.
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Target costing
Target costing is a market-based approach to managing costs. We saw in Chapter 5 that
the starting point is to set the target price of a product on the basis of market research,
which may include an analysis of competitors’ prices. The target price, less the required
profit from the product, will be the target cost of the product. Target costing places
demands on managers because the target cost is usually lower than the current full cost
of the product. Thus, to achieve the target cost, a systematic approach to cost reduc-
tion is often required.
A team of managers, drawn from each of the main functional areas, such as design,
production, purchasing and marketing, will normally be charged with achieving the
target cost. Together they will examine all aspects of the product and the production
process to try to eliminate anything that does not add value. This can place consider-
able pressure on designers, as they are likely to be asked to redesign the product to a

For a manufacturing business, the value-creating sequence begins with the acquisi-
tion of inputs, such as raw materials and energy, and ends with the sale of completed
goods and after-sales service. Figure 9.5 sets out the main ‘links’ in the value chain for
a manufacturing business. We can see that five primary activities are supported by four
secondary activities.
Value chain analysis applies as much to service-providing businesses as it does to
manufacturers. Service providers similarly have a sequence of activities leading to pro-
vision of the service to their customers. Analysing these activities in an attempt to
identify and eliminate non-value-added activities is very important.
Each link in the value chain represents an activity that will incur costs and affect
profits. Ideally, each will add value – that is, the customer will be prepared to pay more
for the activity than it costs to carry out. If, however, a business is to outperform its
rivals, it must ensure that the value chain is configured in such a way that it leads
either to a cost advantage or to differentiation.
To achieve a cost advantage, the costs associated with each link in the chain must
be identified and then examined to see whether they can be reduced or eliminated.
For example, a business may identify a non-value-added activity, such as the inspec-
tion of the completed product by a quality controller. The introduction of a ‘quality’
culture in the business could lead to all output being reliable. As a result, inspection
would no longer be needed and therefore this cost can be eliminated. To achieve
CHAPTER 9 STRATEGIC MANAGEMENT ACCOUNTING
330
‘
The main links in the value chain of a manufacturing business
Figure 9.5
The five primary activities which form the links in the value chain, are underpinned by four sup-
port activities.
Source: Adapted from Porter, M., Competitive Advantage, The Free Press, 1985, pp. 11–15.
M09_ATRI3622_06_SE_C09.QXD 5/29/09 3:32 PM Page 330


the components of the value chain, production, marketing, packaging and distribution? Can you
add a component in a different way, for example with standardised bottles? You are looking at
how to re-engineer the value chain [in order] to lower the price.’
Manufacturers’ brands do this, he says, ‘but they keep the savings, hence they have a better
return on capital’. With supermarket own-label brands on the rise – they account for 50 per cent
of Ahold Dutch store sales, and 15 per cent in the US – Mr Moberg can reduce what it costs him
to make products while at the same time lowering prices, attracting more shoppers to Ahold stores
and thereby raising volumes. . . .
Armed with intricate knowledge of supply chain costs, Ahold can press big brand manufac-
turers to cut the prices they ask of the retailer. It is a delicate balancing act. Both Grolsch, the
Dutch brewer, and Peijnenburg, a bakery group, have quarrelled with Ahold about the damage
inflicted on their brands by pricing policy, while Unilever, the consumer goods group, took Ahold
to court, claiming it had copied its packaging.
It appears, however, to be a battle Mr Moberg is winning. Not only is customer perception of
the quality of own-label products rising – a fact confirmed by independent industry research – but
Ahold has a strong position with big consumer brands through its control of distribution channels,
especially in the Netherlands, where its Albert Heijn chain is market leader and has 700 stores.
Source: Bickerton, I., ‘It is all about the value chain’, ft.com, 23 February 2006.
FT
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develop ways of learning and adapting to their changing environment. To manage
costs successfully, businesses should continually review them in the face of new threats
and pressures rather than relying on particular techniques to provide solutions.
Hopwood (see reference 2 at the end of the chapter) suggests that to transform costs
over time in order to fit the strategic objectives, businesses do not need very sophistic-
ated techniques or highly bureaucratic systems. Rather, they need to change the ways
in which costs are viewed and dealt with. He suggests that the following broad prin-
ciples should be adopted.
1 Spread the responsibility

may be helpful.
5 Focus on managing rather than reducing costs
Conventional management accounting tends to focus on cost reduction, which is,
essentially, taking a short-term perspective on costs. Strategic cost management, how-
ever, means that in some situations costs should be increased rather than reduced.
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332
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Hopwood argues that the above principles, when used in conjunction with overall
financial controls, provide the best way to manage costs strategically.
Real World 9.6 gives an example of how local managers who are not accountants
can identify potential cost savings and not resent their implementation.
Once the strategic objectives of a business have been set, progress towards these objec-
tives must be monitored. This means that there must be appropriate measures by
which progress can be assessed. Financial measures have long been seen as the most
important ones for a business. They provide us with a valuable means of summarising
and evaluating business achievement and there is no real doubt about the continued
importance of financial measures in this role. In recent years, however, there has been
increasing recognition that financial measures alone will not provide managers with
sufficient information to manage a business effectively. Non-financial measures must
also be used to gain a deeper understanding of the business and to achieve the objec-
tives of the business, including the financial objectives.
Translating strategy into action
TRANSLATING STRATEGY INTO ACTION
333
Under what kind of circumstances might it be a good idea to increase costs?
This may include situations that could lead to
l additional revenues being generated
l lower costs being incurred over the longer term

course. However, they can also be used as ‘lead’ indicators by focusing on those things
that drive performance. It is argued that if we measure changes in these value drivers,
we may be able to predict changes in future financial performance. For example, a busi-
ness may find from experience that a 10 per cent fall in levels of product innovation
during one period will lead to a 20 per cent fall in sales revenues over the next three
periods. In this case, the levels of product innovation can be regarded as a lead indica-
tor that can alert managers to a future decline in sales unless corrective action is taken.
Thus, by using this lead indicator, managers can identify key changes at an early stage
and can respond quickly.
The balanced scorecard
One of the most impressive attempts to integrate the use of financial and non-financial
measures has been the balanced scorecard, developed by Robert Kaplan and David
CHAPTER 9 STRATEGIC MANAGEMENT ACCOUNTING
334
‘
‘
How might we measure:
(a) employee satisfaction?
(b) customer loyalty?
(c) the level of product innovation?
(a) Employee satisfaction may be measured through the use of an employee survey. This
could examine attitudes towards various aspects of the job, the degree of autonomy
that is permitted, the level of recognition and reward received, the level of participa-
tion in decision making, the degree of support received in carrying out tasks and so
on. Less direct measures of satisfaction may include employee turnover rates and
employee productivity. However, other factors may have a significant influence on
these measures.
(b) Customer loyalty may be measured through the proportion of total sales generated
from existing customers, the number of repeat sales made to customers, the per-
centage of customers renewing subscriptions or other contracts, and so on.

of measures may include employee motivation, employee skills profiles and informa-
tion systems capabilities. These four areas are shown in Figure 9.6.
The balanced scorecard approach does not prescribe the particular objectives, mea-
sures or targets that a business should adopt; this is a matter for the individual business
to decide upon. There are differences between businesses in terms of technology
employed, organisational structure, management philosophy and business environ-
ment, so each business should develop objectives and measures that reflect its unique
circumstances. The balanced scorecard simply sets out the framework for developing a
coherent set of objectives for the business and for ensuring that these objectives are
then linked to specific targets and initiatives.
A balanced scorecard will be prepared for the business as a whole or, in the case of
large, diverse businesses, for each strategic business unit. However, having prepared an
overall scorecard, it is then possible to prepare a balanced scorecard for each sub-unit,
such as a department, within the business. Thus, the balanced scorecard approach can
cascade down the business and can result in a pyramid of balanced scorecards that are
linked to the ‘master’ balanced scorecard through an alignment of the objectives and
measures employed.
Though a very large number of measures, both financial and non-financial, exist and
so could be used in a balanced scorecard, only a handful of measures should be
employed. A maximum of 20 measures will normally be sufficient to enable the factors
that are critical to the success of the business to be captured. (If a business has come
up with more than 20 measures, it is usually because the managers have not thought
hard enough about what the key measures really are.) The key measures developed
should be a mix of lagging indicators (those relating to outcomes) and lead indicators
(those relating to the things that drive performance).
Although the balanced scorecard employs measures across a wide range of business
activity, it does not seek to dilute the importance of financial measures and objectives.
TRANSLATING STRATEGY INTO ACTION
335
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and Norton, there are various reasons. First, it is because it aims to strike a balance
between external measures relating to customers and shareholders, and internal measures
relating to business process, learning and growth. Secondly, it aims to strike a balance
between the measures that reflect outcomes (lag indicators) and measures that help
TRANSLATING STRATEGY INTO ACTION
337
The cause-and-effect relationship
Figure 9.7
The investment in staff development is linked through a cause-and-effect relationship to the
financial objectives of the business.
Do you think this is a rather hard-nosed approach to dealing with staff development?
Should staff development always have to be justified in terms of the financial results
achieved?
This approach may seem rather hard-nosed. However, Kaplan and Norton argue that
unless this kind of link between staff development and increased financial returns can be
demonstrated, managers are likely to become cynical about the benefits of staff develop-
ment and so the result may be that there will be no investment in staff.
Activity 9.5
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predict future performance (lead indicators). Finally, the framework aims to strike a bal-
ance between hard financial measures and soft non-financial measures.
It is possible to adapt the balanced scorecard to fit the needs of the particular busi-
ness. Real World 9.7 shows how this has been done by Tesco plc, the large retailer.
As a footnote to our consideration of the balanced scorecard, Real World 9.8 pro-
vides an interesting analogy with aeroplane pilots limiting themselves to just one con-
trol device.
CHAPTER 9 STRATEGIC MANAGEMENT ACCOUNTING
338
REAL WORLD 9.7

ments is required. A business, however, can be even more complex to manage than an
aeroplane and so a wide range of measures, both financial and non-financial, is necessary.
Reliance on financial measures is not enough and so the balanced scorecard aims to pro-
vide managers with a more complete navigation system.
Source: Kaplan and Norton (see reference 3 at the end of the chapter).
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The above story makes the point that, if one concentrates only on a few areas of per-
formance, other important areas may be ignored. Too narrow a focus can adversely
affect behaviour and distort performance. This may, in turn, mean that the busi-
ness fails to meet its strategic objectives. Perhaps we should bear in mind another
apocryphal story concerning a factory in Russia which, under the former communist
regime, produced nails. The factory had its output measured according only to the
weight of nails manufactured. For one financial period, it achieved its output target by
producing one very large nail!
Scorecard problems
Not all attempts to embed the balanced scorecard approach within a business are suc-
cessful. Why do things go wrong? It has been suggested that often too many measures
are employed, thereby making the scorecard too complex and unwieldy. It has also
been suggested that managers are confronted with trade-off decisions between the four
different dimensions, and struggle because they lack a clear compass. Imagine a man-
ager who has a limited budget and therefore has to decide whether to invest in staff
training or product innovation. If both add value to the business, which choice will be
optimal for the business?
Whilst such problems exist, David Norton believes that there are two main reasons
why the balanced scorecard fails to take root within a business, as Real World 9.9 explains.
MEASURING SHAREHOLDER VALUE
339
Traditional measures of financial performance have been subject to much criticism in
recent years and new measures have been advocated to guide and to assess strategic

what is meant by the term ‘shareholder value’, and in the sections that follow we shall
look at two of the main approaches to measuring shareholder value.
In simple terms, ‘shareholder value’ is about putting the needs of shareholders at the
heart of management decisions. It is argued that shareholders invest in a business with
a view to maximising their financial returns in relation to the risks that they are pre-
pared to take. As managers are appointed by the shareholders to act on their behalf,
management decisions and actions should therefore reflect a concern for maximising
shareholder returns. Though the business may have other ‘stakeholder’ groups, such as
employees, customers and suppliers, it is the shareholders that should be seen as the
most important group.
This, of course, is not a new idea. As we discussed in Chapter 1, maximising share-
holder wealth is assumed to be the key objective of a business. However, not everyone
accepts this idea. Some believe that a balance must be struck between the competing
claims of the various stakeholders. A debate concerning the merits of each viewpoint
is beyond the scope of this book; however, it is worth pointing out that, in recent years,
the business environment has radically changed.
In the past, shareholders have been accused of being too passive and of accepting
too readily the profits and dividends that managers have delivered. However, this has
changed. Shareholders are now much more assertive, and, as owners of the business,
are in a position to insist that their needs are given priority. Since the 1980s we have
witnessed the deregulation and globalisation of business, as well as enormous changes
in technology. The effect has been to create a much more competitive world. This has
meant not only competition for products and services but also competition for funds.
Businesses must now compete more strongly for shareholder funds and so must offer
competitive rates of return.
Thus, self-interest may be the most powerful reason for managers to commit them-
selves to maximising shareholder returns. If they do not do this, there is a real risk that
shareholders will either replace them with managers who will, or allow the business to
be taken over by another business that has managers who are dedicated to maximising
shareholder returns.

Activity 9.6
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There are broadly four problems with using accounting profit, or a ratio based on
profit, to assess shareholder returns. These are:
l Profit is measured over a relatively short period of time (usually one year). However,
when we talk about maximising shareholder returns, we are concerned with max-
imising returns over the long term. It has been suggested that using profit as the key
measure will run the risk that managers will take decisions that improve perform-
ance in the short term, but which may have an adverse effect on long-term per-
formance. For example, profits may be increased in the short term by cutting back
on staff training and research expenditure. However, this type of expenditure may
be vital to long-term survival.
l Risk is ignored. A fundamental business reality is that there is a clear relationship
between the level of returns achieved and the level of risk that must be taken
to achieve those returns. The higher the level of returns required, the higher
the level of risk that must be taken. A management strategy that produces an
increase in profits can reduce shareholder value if the increase in profits achieved
is not commensurate with the increase in the level of risk. Thus, profit alone is not
enough.
l Accounting profit does not take account of all of the costs of the capital invested by the busi-
ness. The conventional approach to measuring profit will deduct the cost of bor-
rowing (that is, interest charges) in arriving at profit for the period, but there is no
similar deduction for the cost of shareholder funds. Critics of the conventional
approach point out that a business will not make a profit, in an economic sense,
unless it covers the cost of all capital invested, including shareholder funds. Unless
the business achieves this, it will operate at a loss and so shareholder value will
be reduced.
l Accounting profit reported by a business can vary according to the particular accounting
policies that have been adopted. The way that accounting profit is measured can vary