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Various Management Accounting Systems and Its Benefits to An Organisation

   

Added on  2020-12-24

15 Pages5060 Words186 Views
Management Accounting

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1: Various management accounting systems and its benefits to an organisation.................1P2: Various types of accounting reporting system.................................................................3M1: Merits and demerits of using accounting systems .........................................................5D1: Critical analysis of reporting system...............................................................................6TASK 2............................................................................................................................................6P3: Different types of costing method in determining net profitability of company.............6M2. Application of management accounting techniques:......................................................8D2 Costing techniques helpful in providing financial reports that accurately apply and interprate data for a range of business activities............................................................................9TASK 3............................................................................................................................................9P4: Advantage and disadvantage of using planning tools use in budget................................9M3 Use of different planning tools and their application.....................................................10TASK 4..........................................................................................................................................10P5: Various financial issues and measure to resolve it.........................................................10M4 Analyses of management accounting which can lead towards sustainable success......11D3 Use of planning tools to solve financial problems.........................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13

INTRODUCTIONManagement accounting is an activity of preparing managerial reports in order tofacilitate management to make an effective decisions and plans for achievement of desired goalsand objectives. Managerial reports include Profit & Loss a/c, Balance sheet, Cash flow statementetc. that shows true and fair financial position of company which directs management to makechanges in their existing policies so as to attain a good financial position of company incompetitive market. For this, the manager is required to take responsibility of collecting datafrom various managerial reports and take an effective decision for the purpose of increasingprofitability of an organisation (Amidu, Effah and Abor, 2011). The present assignment is based on Johnson Jewellers Ltd. which is engaged inmanufacturing and selling different deigns of jewellery items to the people of UK. The projectexplains various management accounting systems along with their benefit to an organisation. Inaddition, with this, management accounting reporting systems, methods of calculation of netprofitability are briefly described under the report. The project also summarises differentplanning tools to control budget and other tools to resolve financial issues of an organisation.TASK 1P1: Various management accounting systems and its benefits to an organisationManagement accounting: It is a profession that requires specific skills and knowledgewhich assist management in collecting relevant information from the managerial reports in orderto make an effective decisions and suitable plans for the betterment of an organisation. Suchmanagerial reports include Profit & Loss a/c, Balance sheet, Cash flow statement etc. which isprepared on annual basis.Benefits of management accounting systems:Forecasting cash flows: With the help of using various accounting systems, theaccounting managers are able to prepare various kind of reports which makes easy for them toacquire knowledge about inflow and outflow of cash during an accounting period. This willassist management to execute business operations without fearing any shortage of funds(Carlsson-Wall, Kraus and Lind, 2015).1

Increase profitability: Using cost accounting system help in preparation of budget forexecution of each business activities and allocate cost accordingly. This will minimise the cost ofoperations which directly makes positive impact on the profitability of company as well. Increase customer’s strength: Using price optimisation system help in identifying theactual perception of buyers towards the pricing strategies made by company on their productsand services. This will enable management to make changes in existing pricing policies in orderto influence buying behaviour of customers in favour of their offerings. Therefore, using suchsystem provides an opportunity to company to achieve loyalty of targeted people and attain hugecustomer strength.Every organisation irrespective of the size whether small, medium or large always try toenhance their business operations which can be possible through maintaining managerial reportson specific time period. The management is held responsible to prepare managerial reports whichcontains the information related with accounting transactions which were made during theaccounting period. It assists them to make an effective decisions and plans for the growth andsuccess of an organisation. Therefore, the management of Johnson Jewellers Ltd. is required toprepare various kinds of managerial reports with the help of different management accountingsystems such as cost accounting systems, price optimisation system etc (Granlund, 2011). whichprovides relevant information about the current position of company in competitive market. Hereare the brief explanation of various management accounting systems along with their benefits:Cost accounting system: It refers to such accounting system which help in providinginformation about the total cost invested in the execution of different business activities. Itassists management to prepare budget and accordingly allocate cost to different departmentwhich minimises the chances of wastage of money. The main aim of using such system is toreduce cost of operations so as to make positive impact on the profitability of anorganisation. Therefore, it is very important for Johnson Jewellers Ltd. to adopt such systemin order to identify the total cost incurred in business activities so that it can be recover fromthe customers along with their certain percentage of margin. For example, manufacturing anddesigning jewellery items requires huge amount to incur which enable management toidentify the total coast and on the basis of which set pricing strategies including their marginfor their targeted customers.2

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