Comparison of Planning Tools in Management Accounting

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Management Accounting

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Slide 1: Introduction
This presentation is designed to depict comparison of different planning tools used in
management accounting. It will also provide judgement on effectiveness of each tool with
appropriate reasons. This presentation would also facilitate the ways and examples, in which
the management accounting is applied for dealing with financial problems in organizations
and also for preventing the financial problems in organizations.
Slide 2: Planning Tools Used in Management Accounting
Financial Planning
Financial Statement Analysis
Historical Cost Accounting
Budgetary Control
Standard Costing
Break Even Analysis
Variance Analysis
Marginal Costing
Decision Accounting
Revaluation Accounting
Slide 3: Continued...
Financial Planning:
Under financial planning, the short-term and long-term financial goals are designed for the
company. Capital structuring is also a major part of financial planning that is performed by
financial managers in companies. In this aspect, first of all the financial managers decides
total funding needs in business for company. Thereafter, he or she decides that what financial
source should be used for meeting the funding needs in business. Financial manager evaluates

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the cost and benefits that will be faced by company with debt and equity sources of funding.
After most suitable financial sources are selected, which will result in minimum financial cost
to the company. This will ultimately affect capital structure of the company, as the capital
structure of a company composed of debt and equity components.
Financial Statement Analysis:
There are four types of main financial statements of companies such as income statement,
balance sheet, cash flow statement and statement of change in equity. Analysis of these
statements is done for evaluating financial performance of company(Fridson and Alvarez,
2011). There are different techniques used for analysis of financial statements of the
companies such as ratio analysis, horizontal analysis and vertical analysis.
Slide 4: Continued...
Historical Cost Accounting:
Under historical costing technique, the actual costs in business are compared with the
historical costs in order to evaluate performance of company. It means the judgment about
current business performance of company is done on basis of historical business
performance(Greenberget al., 2013).
Budgetary Control:
Budgetary control is also an important tool that is used in management accounting for
evaluating the accounting performance of a company. Under this technique, the budgetary
targets are set for different departments of company. With the application of budgetary
control technique, actual performance of company is compared with the budgeted values in
terms of different types of expenditures and overheads.
Slide 5: Continued...
Marginal Costing Technique: