(Doc)Management Accounting System | Report

Added on - 02 Feb 2020

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INTRODUCTIONFinance plays a significant role in the business as this helps in rescuing management fromthe financial crisis faced by an entity owner. Apple house Guest house has been selected for thegiven report which is used in analyzing the overall performance of this small scale entity inattaining al desired aims and targets. Small scale entity has higher scope in the initial phase asthey spire to grab higher market share by enhancing their current skills and the capabilities inorder to achieve all the goals and the objectives within a given time period. This report alsostates about various management accounting system and reports prepared in the management inorder to communicate easily with the external market to consider all standard's requirement inimproving the current business practices. Income statement's of this small based business will beprepared using absorption and marginal costing method whose profit generation will differ fromeach other as they both taken into consideration the fixed costs of the business differently.Current assignment emphasises on selecting various planning tools whose major motive is toenhance the current business practices of the business in order to grab higher market advantagein the external entity. Financial problems are regarded as one of the important issues in relievingall the current problems by simplifying existing organization structures in the better way to grabhigher market share. Aim of the business is to achieve all desired aims and the objectives toenhance current capabilities of an entity in order to satisfy various consumers.P1 Explain management accounting and different types of management accounting systemManagement accounting is an important tools and technique adopted by an individual inorder to achieve desired aims and the objectives within a given time period. Primary concern ofthe management is to ascertain the initial cost incurred in the business enterprise are required toget reduce as this will decrease the income and the revenue of an entity that affects the overallperformance of the organization. Primary concern of the business is to enhance its skills and thecapabilities in order to grant ultimate advantage to its variety of customers existing the externalmarket. It is regarded as one of the important process in which data will be collected from theexternal business environment in collecting different kinds of costs incurred in the business(Lambert and Sponem, 2012). Various costs incurred in the business includes fixed and variablecosts that are important costs to be considered by the management in increasing overall sales andthe revenue in the business. Costs evaluation is essential that helps in generating higher income
for the business by eliminating all the costs incurred in the business enterprise. Costs is taken asnegative influences imposed on the business in order to bring out the unique talent of anorganization. There are various management accounting systems to be adopted by anorganization that helps in enhancing overall skills and the capabilities of an enterprise is given asbelow:Cost accounting systems-Cost sheets are prepared by an entity which helps in ascertaining allthe cost currently incurred in the business in order to gain higher market advantage on its varietyof competitors exits in the external market. Cost is the primary concern of an entity which needsto be identified in order to gain higher market advantage over various customers exists in theexternal market. There are two important costs incurred in the business such as fixed as well asvariable costs incurred in the business which need to be identified as large amount of costs willsuppress the quality of an entity (Bebbington and Thomson, 2013). Costs can be determined bypreparing cost sheets using both marginal and absorption costing that helps an entity owner inorder to ascertain the current costs incurred in the business which needs to be identified. Variouscosts incurred in the business such as variable and fixed costs that are essential components indeveloping all the products or services tat will be offer in front of all the customers in theexternal business environment. The negative influence of all the costs included in the business isthat it affects the overall performance of an entity which needs toy be identified in the initialphase to generate higher market advantage for an entity in the near future.In an entity is its essential to records all the costs in the business which is important inorder to generate higher sales and the revenue in the future by offering all their services to cateral the needs and the expectations of various customers.Inventory management-The valuation of all the stock is important as utilization of all theinventory is important in order to increase current sales of the business. Valuation of all theinventories is important as this would help an entity in order to gain higher market advantage asinventories are properly recorded along with is correct valuation using various methods likeFIFO, LIFO and average cost method to facilitate its users to apply any method out of the aboveaccording to their interests and choice as it is essential for the business to manage all theinventories. The various ways and means are used by an entity that helps in creating highermarket advantage by enhancing their current skills and the capabilities to ensure its higher
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