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The role of management accounting in financial planning

   

Added on  2020-10-04

16 Pages4511 Words480 Views
Management Accounting
The role of management accounting in financial planning_1
Table of ContentsINTRODUCTION...........................................................................................................................3LO1..................................................................................................................................................3Role of management accounting and its system or requirement.................................................3LO2..................................................................................................................................................6Application of management accounting techniques....................................................................6LO3..................................................................................................................................................7Explain the use of planning tools used in management accounting............................................7LO4................................................................................................................................................11Compare ways in which organisation can use management accounting to respond financialproblems....................................................................................................................................11CONCLUSION..............................................................................................................................12REFERENCE................................................................................................................................13APPENDIX....................................................................................................................................14
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INTRODUCTIONAccounting is the part of any business that is used to define, recording, dividing,measuring, verifying, summarizing and communicating financial data. It states profit or loss for agiven time period, where as management is the process of managing resources that helps to meetwith company's goals with the help of employees and organisation resources. Managementaccounting gathers, analyses, interpret and monitor the financial, qualitative and statistical datathat help to make effective business decision (Becker and Ulrich, 2016). To understand theconcept of management accounting Aston Martin has been chosen that is UK based company. Itmanufactures luxury sports cars and grand tourers. This report will state managementaccounting, its system, techniques and accounting reports that helps to understand importance ofmanagement accounting. Additionally, this report will contain planning tools which is used tocontrol the budget and solution of financial problems. LO1Role of management accounting and its system or requirementManagement accounting plays different types of role in a organisation that helps toachieve company's goals and and maintain profitability by managing accounts and information.Profit maximization: Any organisation can increase its productivity that helps tomaximise the profits of an organisation. Such as manager of Aston Martin keep records oftransaction and manage the accounts in order to increase profits.Helps to identify poor performance: This is used to identify the poor performance andcorrect them with the help of management accounting. In Aston Martin, manager records theorganisation as well as employee's performance and helps to correct it by reviewing performance(Bradlcy, 2015).Proper use of budgeting: It is used to make effective budget and control the techniquesin accounting which is needed to interpret the financial information in order to reduce expenses.Such as Accountant of Aston Martin prepare a budget by considering past information and usein organisation that helps to control the expenses.Making effective decision: Manager of Aston Martin used management accounting thathelps to manage all records and financial information in order to take corrective businessdecision.
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Management accounting system and its requirementManagement accounting is a part of internal management and control that not only assistthe internal management but also help in decision-making. Management accounting system is theway of tracking records of accounting activity and provide financial information to run abusiness effectively, this is very effective system that is used in most organisation to get properrecords of transaction and maintain profitability. Aston Martin is a manufacturing companywhose manager prepares final accounts and reports that is used internally in order to increaseprofits and keep records of financial information. It follows different types of managementaccounting system such as- Inventory management system: This is used for tracking the goods, orders, sales anddelivery of goods and services. To maintain inventory management is very important inmanufacturing company that helps to place orders, keep raw material records and manufacturingdocuments. Moreover, this system stipulate the configuration and arrangement of collectedgoods. As Aston Martin is manufacturing industry use inventory management system to arrangethe raw material and finished goods and also maintain orders of socks. It is required as different location and places such as within a facility, in manufacturingindustry and at many location to supply goods and services. Cost accounting system: This system is mostly used by producers to keep records ofmanufacturing activities with the help of inventory management system. Such as manager ofAston Martin use this system to maintain cost of products and services and track the flow ofstock continuously by using different phases of production.It is required in manufacturing and many companies to track the flow of inventory ondaily basis. In other words, it is required to allocate the limited resources for specific project andmanufacturing process (Bruehne and Schanz, 2018). Job costing system: This system is used for gathering and classifying production cost ofsingle unit of output. It involves number of items who has different cost, need to manageeffectively. In Aston Martin, manager collects and divide the production cost of each item thathelps to provide relevant information for business activities.It is required at large industry who manufactures number of item and need to classify injob order costing. Jobs are classified on the basis of business activities and information.
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