Advanced Management Accounting (Doc)

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ADVANCEDMANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1LO 1.................................................................................................................................................1Purpose behind presentation of financial information.................................................................1LO 2.................................................................................................................................................3Uses of different accounting microeconomics techniques...........................................................3LO 4.................................................................................................................................................7Impact of external & internal business environment factors on management accounting..........7CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................11
INTRODUCTIONManagement Accounting is an activity which enable internal management of anorganisation in making important business decisions and formulating business strategies. Further,management accounting also helps managers in discloser of its financial information to itsstakeholders so that they can rely on companies operations. With the help of managementaccounting managers can project future financial of company by preparing budgets and are ableto minimise and manage cost of products and services offered by business with the help ofdifferent cost techniques. The below report explains purpose of presentation and discloser offinancial information. Furthermore, this report explains uses of various management accountingtechniques. Moreover, this report elaborate advantages and disadvantages of techniques ofmanagement accounting. At last, the below report examines impact of business environmentfactors on management accounting.LO 1Purpose behind presentation of financial informationFinancial InformationTo evaluate financial performance and for deciding future objectives of a company it isnecessary for accountant to collect its financial information and present it to companiesstakeholders such as governments, employees, shareholders, suppliers, managers, board ofdirectors and Banks or Creditors. Financial Information is presented by business organisationwith the help of financial statements such as Balance Sheet, Statement of Cash Flow andStatement of profit & loss(Abdel-Maksoud, Cheffi and Ghoudi, 2016).Tesco is a UK based retailer which offer its products and services in many countriesacross the world. Company sale groceries and other merchandises through Super Market, HyperMarket and shopping Malls. As this company is operating its business across the globe it isnecessary for company to gather and manage data related to financials. Financial Informationcontains information related to assets & liabilities, profits & loss and cash inflows and outflows.Thus, According to (Kaplan and Atkinson, 2015) financial information is presented with thepurpose of achieving future financial goals and analysing efficiency of companies operation.Further, on the basis of financials managers of company can make decisions related to expansionand diversification.1
Further, Financial information is also presented with the purpose of measuring liquidity,profitability and efficiency of Tesco by calculating different ratios and with this ratios investorscan make investment decisions.As per the view of (Harrison and Lock, 2017), The main purpose of financial informationis disclosing companies position to itsstakeholdersas they are pillars of company and withoutthem a business is not able to run its operational activities. Business of Tesco is also dependentupon its Stakeholders and these individuals supports firm in raising capital and forming rules &regulations. Stakeholders helps an organisation in enhancement of its market share, brand imageand profitability. Financial statements are having different importance & purpose for differentstakeholders.Board of Directors(BOD)-Board of Directors supervisors and regulators of a businessfirm and number of directors in a company is dependent upon its operations. BoD of Tescoincludes many individuals and they control different departments and areas with in theorganisation. Further, BoD make decisions for capital investment, formulate policies for itssubordinates and manage so that companies operational activities can be improved. Thus, for allthese Board of Directors show interest in Financial Information of a company.According to (Al-Dhubaibi and Abdullah, 2016), Board of Directors represent companiesshareholders thus, they also make various decisions such as decision related toDividendDistribution, Bonus IssueandInitial Public Offeringwhich is possible only if company isdisclosing its financial information to its Board of Directors. Because, all these decisions aretaken on basis of profitability and performance of an organisation.Shareholders-Shareholders are individuals who make investment in shares of companyand helps business in raising capital. These individuals show interest in financials of business tomake investment decisions. With the help of financial statements and by analysing annual reportinvestors can evaluate companies performance and if company is gaining more profits &distributing dividend frequently than shareholders gets attracted. This further helps company inincreasing its market shares as investors make more investment if financial position is good.Further, shareholders also interested in examining financial reports as with that they areable to analyseRisk and Returnof their investment and if their investment is associated withhigh risk than they can make decision of selling the securities and invest that money in othershare which is giving return.2
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