Assignment On the Management Accounting

Added on - 07 Jan 2020

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AssignmentManagement AccountingStudent Name:Student ID:College Name:College ID:1
Table of ContentsIntroduction...............................................................................................................................3Task 1.........................................................................................................................................3LO1: Explanation of the management accounting system....................................................3P1: Essential requirements of the different types of management accounting system.............3P2: Methods of management accounting system.....................................................................6Task 2.........................................................................................................................................8LO2: Application of the Management accounting techniques...............................................8P3: Preparation of the income statement by using the marginal and absorption costs.............8Task 3.......................................................................................................................................13LO3: Use of different planning tools in the management accounting system...................13P4: Explanation of the advantages and disadvantages of using the different types of planningtools used for budgetary control.............................................................................................13LO4: The process that should be followed by organisations to use the managementaccounting system to respond the financial problems........................................................14P5: The process that should be followed by the organisation to adapt managementaccounting system to resolve the financial problems.............................................................14Conclusion...............................................................................................................................17Bibliography............................................................................................................................172
IntroductionAccountability is a vital part of the business organisations. Organisations do differentbusiness activities to survive in the industry. Therefore, organisations have to invest alot of money to do the business activities in an efficient manner. Organisations alsohave to adopt an accountability process to calculate the expenses made in the businessactivities and keep the record of expenses that will be used by the auditor to preparethe financial statement of the company (Fullertonet al.2014, p. 420). Organisationshave to calculate the cost of the business activities in an efficient manner to minimizethe cost of the organisations and maximize the profit of the organisation. Organisationbasically does their business activities for achieving different objectives but wealth andprofit maximization. Organisations can easily achieve the profit maximization objectivesby using the management accounting. Organisations prepare the budget for thebusiness activities by using past experiences and techniques of the managementaccounting. The preparation of budgets provide organisations a detail information aboutthe cost and income of a particular business activity in the organisation. The followingstudy will discuss about the application of management accounting in the organisationto prepare such budgets for the business activities in the organisations and the role ofmanagement accounting behind the success of the organisations.Task 1LO1: Explanation of the management accounting systemP1: Essential requirements of the different types of management accounting systemManagement accounting system played a vital role in the financial managementdepartment of the organisations. Management accounting is a process by whichorganisations prepare the sources of the capital to invest in the business activity,analyze the cost areas of the business activity in which organisations have to invest the3
resources properly and communicate different ideas that help the decision makers ofthe organisation to makes some effective decisions towards the different aspectsbusiness activities(Otley and Emmanuel, 2013, p. 225). Management accountingsystem is a combination of accounting, finance and management therefore, this systemprovide relevant information associated with such activities in the organisation. Theskills and techniques of the management accountant not only keep the account of thedifferent business activities but also provide advice to the managers of about theimplication of different financial measures in the activities, take some major decisions inthe activity, formulation of different business strategies in the organisation to monitoringthe risk and maintain a sustainable success of the organisations. Organisations have tounderstand the scope of the management accounting system to understand therequirements of this system in the organization (Cooperet al.2017, p. 455).A) Management accounting system provide some relevant information about the statusof national and global economy that help the organisation not only to prepare someeffective financial strategy to finance the activities but also help to prepare themarketing and resource management strategies to run the business activities oforganisation successfully.B) Management accounting system also help the organisation to manage theperformance of the business activities by providing some relevant informationassociated with the performance of the business activities. Management accountingmeasure the performance of the activities based on the financial performance therefore,organisation can get a clear vision about the financial performance of different aspectsof the business activities in details (Ax, and Greve, 2017, p.65).C) As management accounting provides different information about the national andglobal economy therefore, the organisation can get a clear view about the riskassociated with such business activities. Management accounting also provide sometools and techniques to manage such risk associated with the business activities.Cost accounting system-The system under which firm able to analyse aboutcosting level which incurred in various process of business. In this,administrative, marketing, production, employee etc. related costs are recorded4
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