Management Account Principles Part 1 and Effective Planning Tools for Managing Accounts Part 2

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and types of management accounting systems...............................1
P2 Methods used for management accounting reporting.............................................................2
TASK 2............................................................................................................................................3
P3 Costs using appropriate techniques of cost analysis...............................................................3
TASK 3............................................................................................................................................5
P4 Advantages and disadvantages of different types of planning tools.......................................5
TASK 4............................................................................................................................................7
P5 Organizations are adapting management accounting systems................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Managerial accounting is another name of management accounting that is considered as
an approach for financial data used in company for development purposes (Busco and Quattrone,
2018). Internal team of venture makes more use of the provision as to make rational decision
about business future. Using this, accountant present data concerned with finance to management
in unique manner that makes it easy to devise better decisions about practices to be undertaken
for reaching success. This consists presentation of the financial information for the internal
purposes that mainly used through management in order to main business decisions.
Management account is procedure of the preparing reports related to management and accounts
which give the accurate as well as financial information to the managers for making the long
term and short term decisions. Innocent Furnitures considered entity for the project. It is a firm
that manufactures various kinds of wooden products including beds, desks, chairs and so on.
In the report, there is a discussion of management accounting along with provide
necessary requirements of various classes of the management accounting. Benefits and the
disadvantages of numerous kinds of the planning tools used in the budgetary control are
discussed in a detailed manner.
TASK 1
P1 Explaining what management accounting is and its systems
Managers use accounting provisions information to inform better themselves before they
decide the matters within company. In Innocent Furnitures, it is used only through internal team
of company and this thing makes it varied from the financial accounting (Abernethy and
Bouwens, 2015). Within the establishment, only requirement of management accounting is to
serve efficient data in concise and understandable format that helps in making significant
decisions for upcoming couple of years in competitive era. Through techniques that are
forecasting, analysis and so on, procedure of making decisions for investment, expenses, receipts
and hence forth are devised in more justified manner. The main purpose of management
accounting is to help internal users to firm in making informed business-related decisions. In
aspect to Innocent Furnitures, managers uses management accounting for planning practices and
some actions in order to rectify certain number of situations.
Management accounting systems
1

Inventory management system: This is mixture of the processes in addition technology
which looks towards monitoring as well as maintenance of the stocked goods. In dynamic era,
inventory management system helps businesses to control stock by increasing order volumes and
expanding across wider channels of sales in departments with the attempt to manage operations
in best possible aspect (van Helden and Uddin, 2016). In context to Innocent Furnitures,
inventory management system track the quantities effectively in storing the location. Essential
requirement of the inventory management system mention below:
 Categorising the material together with managing an inventory of Innocent Furnitures to
give the necessary inventory. To keep track of the available stock as well as manage the reorder level.
Cost accounting system: It is a framework that used through organisations to guesstimate
cost that are related with goods with the hope of analysis of profit and inventory valuation
(Mowen, Hansen and Heitger, 2015). Its essential requirements given below:
 Allocate cost according to activity that is related to traditional costing and activity based
costing. Track the cost and also control them by making better decisions which are related with
enhancing profitability and productivity of the Innocent Furnitures.
Job costing system: This is system for accumulating and assigning the manufacturing
costing of person. It is used when different items are manufactured different from the each other
and has significant cost. Essential requirement of the Job costing system mention below:
 Ascertain the reliable estimation for the monetary values concerned to overheads,
information labour and direct material in Innocent Furnitures.
 Applying the information and accumulating for assigning cost to process the goods
(Shao, Wang and Feng, 2015).
P2. Different methods used in company in regards to management accounting reporting
In all businesses, management accounting reporting plays crucial factor in displaying
financial position or status of entity at current or over a particular time frame. Management
accounting reporting is process of giving information to different management levels as to enable
judging effectiveness of responsibility centres and taking the corrective decisions. This
emphasizes on the inside information that received by financial accounting (Hsu and Lin, 2016).
In regards to this, managerial accounting reports are greatly used in context for planning,
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