Importance of Management Accounting | Doc

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1LO 1 and LO 2.................................................................................................................................11. Importance of management accounting for decision making process of company inimproving financial performance................................................................................................12. Different types of management accounting systems used in reporting and its integration inbusiness operations......................................................................................................................33. Critically evaluating the benefits of management accounting system and MA reporting withorganizational process................................................................................................................44. Calculation of income statements...........................................................................................6LO 3...............................................................................................................................................10Comparing and analysing of different planning tools used in management accounting of NeroLtd.............................................................................................................................................10LO 4...............................................................................................................................................12Importance of management accounting in dealing financial problems and achievingsustainable success....................................................................................................................12CONCLUSIONS............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONManagementaccountingis method which used by managers for the provision ofaccountinginformation which helps in developing effective information for the maximization ofprofit for entity. This present report provides an information related to management accountingin context of companySewport.In this report an explanation is to be provided on managementaccounting and its importance on decision making process with types of management accountingwith its integration in business. Further, in this report calculations with the explanation ofdifferent planning tools of budget is explained with view of Nero ltd. and importance ofmanagement accounting in solving financial problems of the organisations.LO 1 and LO 21. Importance of management accounting for decision making process of company in improvingfinancial performanceManagement accountingis the process which is known for identifying, measuring,analysing, interpreting and for communicating information of organisations to achieve overallbusiness goals (Importance of Management Accounting,2018).Itoverall helps managers ofSewportorganisation to clarify the decision problems, specifying criteria and identifyingalternatives by which decision making model developed and to collect data which set analternative. This overall will lead to develop effective strategies and policies for improvement oforganisation.Management accountant is the tool which is used to design and implement accountinginformation system so that effective production, marketing and financial decision will getdeveloped to get better business operations. Another importance of management accounting is toprotect future of firm by developing effective competitive strategies for organisation.Management accounting used by business organisation's for knowing overall amount ofmoney which has been spent in developing business operations. It is also used by managementjust to analyse availability of resources which needs to develop for improving capabilities oforganisations (Kaplan and Atkinson, 2015). Therefore, not only managers used managementaccounting but it is also important for stakeholders which helps in developing effective policies.Importance of management accounting in decision making is as follows-Analysing expenses and revenue:1
Revenue refers to money which is earned by company by their business operations. Moreemphasis of company is to reduce their expenses and to increase its overall revenue becauserevenue refers to profitability of company. Expenses of the company include salaries, rent,payments and cost which incurred for developing effective production in company. Therefore,management accounting helps managers in getting accurate figures of revenues and expenses.This analysis of revenue and expenses helps managers in developing effective strategies forreducing expenses and for generating better revenues.Creating Budgets and Forecasting Ideas for growth:Once analysis is done regarding revenue and expenses, role of management accounting isto develop effective budget for forecasting business projects and operations with in organisation.This development of budget will overall helps management in achieving long term growth andprofitability of organisation from business market. Management accounting provides accuratefigures and data's which overall helps in developing effective strategic policies. Policies aredeveloped by comparing previous year performance which result in getting effective sustainablegrowth of the company(Otley, 2016).Development of confidential information:For the development of effective strategies, accounting managers will guide decisionmakers of company regarding the raw data's and numbers for implementing changes inorganisation. This analysis of raw data, helps management in developing effective actionablepolicies. Information generated in management accounting are provided to users of the companywhich overall helps upper management in taking company in profitable situation which overallresult in developing competitive advantage of company in business market.Helps in understanding performance variances:Management accounting used by managers for developing variances which helpsmanagers on predicting goals which needs to achieved for developing better operations oforganisation. Therefore, role of management accounting is to analyse techniques which overallhelps management in building positive variance in achieving sustainable growth of theorganisation.2
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