Demonstrate Understanding of Management Accounting Systems
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Added on 2020-10-22
Demonstrate Understanding of Management Accounting Systems
Added on 2020-10-22
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MANAGEMENTACCOUNTING
ContentsINTRODUCTION..........................................................................................................................1DEMONSTRATE UNDERSTANDING OF MANAGEMENT ACCOUNTING SYSTEMS ..........................................................................................................................................................1Explain the management accounting and also explain needs of management accountingsystems ..................................................................................................................................1Management accounting system and the reporting integration within organisational processes................................................................................................................................................3PART B..................................................................................................................................3EXPLAIN USE OF PLANNING TOOLING USED IN THE MANAGEMENTACCOUNTING..............................................................................................................................7Use of various planning tools and their application...............................................................9COMPARISON OF ORGANISATION USING MANAGEMENT ACCOUNTING TORESPOND TO FINANCIAL ISSUES..........................................................................................11Comparison of how organisations are adapting management accounting systems to..........12Respond to financial problems............................................................................................12An analysis of how in responding to financial problems, management accounting can lead12organisation to sustainable success.....................................................................................12An evaluation of how planning tools for accounting help to solve problems and support..13Organisations with sustainable success...............................................................................13CONCLUSION............................................................................................................................13BIBLIOGRAPHY........................................................................................................................14REFERENCES.............................................................................................................................15
INTRODUCTIONManagement accounting refers to analysis of the financial data and the advice tocompany for the use in business development. This process of analysing the operations as well asbusiness cost for the purpose of prepare the internal financial reports and records helps topmanagement in process of decision making to attain set business objectives. It is an act ofmaking the sense of costing and financial data and then translating it into useful information fortop management within company (Bouten and Hoozée, 2013). This present report is based onRolls-Royce Holdings that is an engineering firm, focus on world- class propulsion, and powersystem. In this mention report will discussed about the management accounting and essentialrequirements of different types of systems. Benefits and disadvantages of different types ofplanning tools, which are mainly used for the budgetary control, will discussed here.DEMONSTRATE UNDERSTANDING OF MANAGEMENTACCOUNTING SYSTEMS Explain the management accounting and also explain needs of management accounting systems Management accounting is mainly used through the managers for purpose of taking theeffective decision for performing business operation and control the different functions forbusiness productivity. It consists creation of the Management accounting reports to give accurateinformation to formulate short term as well as long-term plans for achieving company objectives(Cadez and Guilding, 2012). For assure that work is to be performed according to plannedactivities, there are different kinds of accounting system mention below:Cost accounting system: It is a kind of Management Accounting system that is mainlyused by managers for the purpose of recording activities tracking materials and examining theproduction cost at various production phrases from the raw material to finish. This system aids inapproximation associated cost for measuring profit level valuation of inventory and controllingcost. Rolls-Royce applies this system for examining the different cost at every product stage andfocus on the products, which will be benefited, more to firm (DRURY, 2013).Price optimisation system: Price optimisation system is used to set prices of productsused by companies so that company and customers both can be in profitable stage. Throughusing this method, company can meet with its objectives like enhancing operational costs. 1
Inventory management system: It is mainly used for production manager in order totrack the status of the current and needed stock for performing the business operations. It helps inreducing the situation such as under stock and over stock of inventory at workplace. In context toRolls Royce, Inventory managementsystem is mainly used for purpose of looking stock at thewarehousing as well as Shipping in order to track the outgoing and incoming products throughusing supply chain management. Management accounting reporting: The management accounting reports produces reports forinternal stakeholders of an organization as opposed to external stakeholders. It helps in providingthe accurate statistically and financial account records in proper time to management for purposeof making short- term decisions (Fullerton, Kennedy and Widener, 2014). Different managementreports are given below:Budget reports: This is formal statement and estimation of the revenue and expenditure.This report is mainly prepare for future purpose to attain the business goal. On the other hand, itcan be prepared for the long-term and short-term purpose. It is effective for the performancemeasurement and planning purpose and helpful in take necessary decision regarding growth offirm. As Rolls-Royce, develop budget in order to anticipate the expenses as well as income forthe future and helpful in take the business decisions for the purpose of Business expansion(Herzig and et. al., 2012). Account receivable ageing report: This kind of report is developed by company underwhich management records the details of those customers which buy product on credit basis.This kind of report is mainly developed through those organisations, which perform trading incredit that traits are clearly mentioned with name and other details related to credit transactions.Rolls-Royce develop this kind of report through gathering information for identifying theinvoices, which are due for the payment purpose (Hiebl, 2014). This is mainly used formanagement in order to examining potential of bad debts and this is revised for doubtfulaccounts. Evaluation of benefits of various management accounting systemsThe benefits of different Management Accounting system mention below:Advantages of cost accounting system- The main benefit of cost accounting system isto measure expenses and the cost. It allows an organisation to measure efficiency of business.Another benefit of this system is that it can help in identify unprofitable activities of business. 2
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