Assignment on Management Accounting | Report

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Added on 2020-01-16

Assignment on Management Accounting | Report

Added on 2020-01-16

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Management Accounting

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3SECTION-1.....................................................................................................................................31 Importance of Management Accounting..................................................................................32 Types of Management Accounting Systems.............................................................................43 Application and Benefits of Management Accounting Systems in an Organization................54 Income Statements....................................................................................................................6Section-2 .........................................................................................................................................9Part-A...........................................................................................................................................9Part-B.........................................................................................................................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................122

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INTRODUCTIONManagement accounting is the process of systematic analysis, interpretation andpresentation of accounting information collected with the help of financial and cost accountingfor the purpose of assisting management in many areas such as decision making and framinglong term and short term policies (Ball, Grubnic and Birchall, 2014). Therefore, managementaccounting is based on the costing principles. Management accounting reports are for the internalassessment of an organization. These reports usually consist of details about the cash, salesrevenues as well as organization's accounts payable and receivables (Bebbington, Unerman, andO'Dwyer, 2014). The present report is going to discuss various useful aspects of managementaccounting along with their applications. Along with that different types of costing methodsspecifically absorption and marginal costing will be discussed in detail. The present reporteffectively addresses the importance of management accounting in the companies. The varioususes and applications of the management accounting has been analyzed. Also necessaryexamples have been cited for the purpose of establishing the relevance of the different aspectsused in management accounting. Moreover the explanation of how management accounting canbe used to improve the cash flows and financial returns of the business. SECTION-11. Importance of Management AccountingManagement Accounting makes an efficient partnering with the other financial aspects ofan organisation. It also has a great significance in the decision making, devising planning andperformance management systems and thus providing expertise in the financial reporting andcontrol to assist the management in the formulation and implementation of an organisationstrategy (Bebbington, Unerman, and O'Dwyer, 2014). Following are some of the reasonshighlighting importance of use of management accounting concept in various organizations .Measuring Performance- Two types of performances can be measured with the help ofmanagement accounting. Firstly, analysis is made at the individual employee’s level that is theperformance of employees. Secondly, efficiency of performing various tasks is measured withthat of their respective standards maintained by the organization. In this process, actualperformance is compared with the standard performance and the deviations are analysed as well.3

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These deviations will be finally reported to the management and hence individual accountabilityfor different tasks will be established (Sandalgaard and Nikolaj Bukh, 2014). This will help inthe performance assessment of each employee and the respective departments. Also, the policiesregarding incentives can be framed with reference to their performance (Bebbington, Unermanand O'Dwyer, 2014). Risk Assessment- This is also one of the major objectives ofmanagement accounting. It isused for the assessment of risks andfor managing them effectively in order to prevent anyuninterrupted business operations.Systematic Allocation of Resources-udgeting is an important area in managementaccounting which includes the allocation of resources for different business operations. This willprevent the wastage and production of damaged unitsincompany. Proper resource allocation isalso important for the purpose efficiently managing all the scarce resources available in theorganisation. The management accountant has been appointed to utilise the current resources astheir primary aim is to minimise the costs. The cost reduction is the basic factor which isfollowed by devising of strategies to ensure its achievement of several goals and the objectives.The resources that is financial resources are optimally utilised in the best possible manner to faciliate various users. The budgeting will determine the current requirements of the resources in abusiness to meet the needs and the expectations of the existing business. Presenting Financial Statements to the Management- Management accounting reports areof great significance for the purpose of preparing financial statements of organisation. Thefinancial statements incorporate information which is available from the reports presented bymanagement accountant of company. The good presentation of the financial statements will helpan entity in order to attract wide number of investors to invest in the current business. Theaccoutring standards will also guide an entity to follow various frameworks in order to presentthe financial statements in a better way.2. Types of Management Accounting SystemsResponsibility Accounting- This system is based on the concept that managers ofrespective departments are only accountable to the items to which they exercise control.For instance: purchase manager will only be held responsible for the purchase of4

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