Essay on P1 the Purpose of Accounting
Added on 2021-02-20
20 Pages5781 Words68 Views
Advanced ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1- Purpose of financial information for different stakeholders.................................................1M1- developing financial information for planning and decision-making..................................3D1- Critical evaluation of financial information........................................................................6TASK 2............................................................................................................................................7P2- Evaluation of different microeconomic accounting techniques............................................7M2- Advantages and disadvantages of accounting techniques....................................................9D2- Application of different accounting techniques and variances...........................................11TASK 4 .........................................................................................................................................11P5- External and internal factors impact on management accounting.......................................11M4- Impact of different types of changes and responses to such changes................................14D3- Critical evaluation of change and recommendations on acceptance of change..................15CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONManagement Accounting is a professional attribute of core accounting which aligns with themanagement body of the business in formulation of strategic policies and decision makingcriterion for the future. To better understand, the contextual literature of management accountingin business, ABC Ltd., a profitable SME planning to expand abroad is chosen to develop a deepunderstanding of various Management accounting systems, processes, principles, fundamentaltools and techniques which shall be preferred by the decision making body of ABC Ltd. Tounderstand the need of it in developing a profound system and monitoring business growth withthe help of critical financial information provided by management accounting (Bhimani, 2009).Advancement in management accounting as a system helps business in taking accountingknowledge more vibrantly and seriously to regulate its functions, processes and future decision-making criterion. TASK 1P1- Purpose of financial information for different stakeholdersFinancial information: It is the information derived from financial statements of thefirm. Financial statements which comprises mainly of profit & loss statement, balance sheet andcash flow statements etc. provide key business related information which helps the managers andstakeholders in inferring about the health and wealth of the business. Financial information ishighly used for the purpose of meeting reporting standards as a legal requirement by regulatorybody of the respective business nation (Chenhall and Moers, 2015). ABC Ltd Is surrounded byvarious stakeholders who seek constructive financial information of the business which isdiscussed as follows: Internal stakeholders: These are the stakeholders who are internal to ABC Ltd., who arethe first ones to be directly associated with the information. They are concerned with generatingtrue and fair statements, making agendas for the business to be conducted, and ensuringcompliance requirements by abiding to the procedural norms of preparing sound financialstatements (Andriof and Waddock, 2017). They typically include: Employees: They form the most important element of business as they are the ones whohelp a company in growing exponentially. The purpose of financial information for employees isto ensure sustained financial health of the entity because the health of the firm is directly related1
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