Management Accounting System Assignment - Solved
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Added on 2020-10-05
Management Accounting System Assignment - Solved
Added on 2020-10-05
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting system and its requirement in business.........................................1P2 Methods of management accounting reporting......................................................................3P2 Preparation of income statement using different techniques.................................................4TASK 2............................................................................................................................................8P4 Various planning tools of budgetary control and their advantages and disadvantages.........8P5 Adoption of management accounting system as to responding to various financialproblems......................................................................................................................................9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
INTRODUCTIONManagement accounting is a branch of management which concerns with the preparationof financial and statistical report of the business and making it available to managementwhenever it is required. This report includes importance of management accounting in decisionmaking process, brief discussion about various management accounting system along with theirbenefits. The study also shows preparation of income statement using different techniques ofmanagement accounting. The report includes a brief comparison of different planning tools ofbudgetary control and their importance in solving financial problem. TASK 1P1 Management accounting system and its requirement in business.“Management accounting is a technique of management in which managers uses theirprofessional knowledge and skills for the preparation of data showing information relating toaccounts and statics of business for the purpose of using them in formulation of strategies andplans for the business organization.”It is an important part of decision making process as managers uses past informations fortaking better decisions for the business, and management accounting provides all majorinformation relating to cost, efficiency, financial data, financial performance, etc. to managers.All these informations helps managers in taking the best decisions for the business anddeveloping the best strategies and plans for the business as per its past performance of businessin order to improve them and increasing overall performance and profitability of business(Höglund, 2016).There is major difference between management accounting and financial accounting like:Basis Management accountingFinancial accountingObjectives Its main objective is to providerelevant information to internalmembers of business.Its objective is to provideinformation to the investorsand other outsiders ofbusiness.MandatoryIts preparation is optional forany businessBusiness need to preparefinancial accounting reportseach year.UsersManagement and other internalIt is useful fot outsiders of1
members of business.business like investors,creditors, competitors, etc.Management accounting system Management accounting system is an integral part of planning and controlling processwhich helps the managers in managing financial position of business. It is a technique ofmanagement that provides help in enhancing profitability and financial position of business byincreasing its efficiency in investment of cash, preparation of budgets, etc (Otley, 2016).Types of management accounting system:1.Cost accounting system: this system helps the management in managing cost efficiencyin the business. It provides methods of estimation of cost of various departments ofbusiness. This technique is beneficial for manufacturing concerns. Benefits:With the help of this technique, management can estimate cost of variousmanufacturing processes.It enables management to make strategies to eliminate wastage of cost at each stageof manufacturing process in order to develop the business as more cost efficient.It provides help in analyzing of cost control and efficiency, inventory managementand profitability of business.2.Inventory management system: Inventory management refers to using differenttechniques and methods for having an effective control in the business in order to avoidshortage or excess of inventory in business. It is beneficial for every business whether itis manufacturing concern, retail business, wholesale business or any other business. Benefits:It helps management in tracking the data relating to receiving and outgoing of inventory.With this information, business enables to maintain appropriate amount of inventory inthe business. With the use of this technique, management can minimize wastage of inventory.It helps in having effective control over maintaining appropriate amount of inventory inorganization.2
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