Planning Tools to Avoid Financial Problems
Added on 2020-10-05
13 Pages3092 Words172 Views
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ManagementAccounting.
ContentsINTRODUCTION.....................................................................................................................................3TASK 1....................................................................................................................................................3A. Advantage and disadvantage of various types of planning tool....................................................3B) Use of various planning tool for preparing and forecasting budgets.............................................7C) Adaptation of management accounting system to respond financial problems. .........................7d) Management accounting system lead to long term sustainable success. .....................................9e) Planning tool to avoid financial problem.......................................................................................9CONCLUSION.......................................................................................................................................10REFERENCES.........................................................................................................................................11
INTRODUCTIONManagement accounting is considered to the techniques of manager that help them determine, organise, report and make effective decision (Anderson and Sedatole, 2013). This collected information helps them in preparing management reports and accounts which further provide them appropriate and timely financial and performance information about worker and company. To understand the importance of management accounting Airdri is taken into account.In this report advantages and disadvantages of different planning tools are implemented to control budgetary process and their effectiveness to solve financial problems is described. Report also shows the importance of management accounting system to respond the financial problems.TASK 1A. Advantage and disadvantage of various types of planning tool.Budget:It is defined as the financial plan which is a microeconomic idea that demonstrates the trade-off made when one product is traded for another. In business term it is defined as an internal tool used by management and is frequently not required for reporting by outside parties. A financial plan is valuation of income and expenditures over a predefined future timeframe. Budgets can be made for an individual, a household, group of personnel, a firm, for government, country and international companies that all are willing to spend money and making profit. In Airdri, manager makes use of different kind of budgets as a planning tool that further helps in solving and overcoming various kinds of financial issues (Drury, 2015). There are various advantages of budget that help in maintaining the budgetary control processin Airdri. Budgetary control process is related to the actual comparison of income and expenses by manager of company with the planned revenue and spending. Some of the common advantages and disadvantages are explained below:Advantages:
Budgets transformplanned strategiesinto action of achievement. They state theassets,incomes and events required perform the executed plan for the specific period of Time.It supports to have a great record of companies businessactivities.Budgets improve communication with employees and help them to overcome any problems.It support in improving resources distribution because all requests for every department are explained and acceptable.Disadvantages:The main problem happens when budgets are realistic and are applied automatically and strictly that hinder the decision making of manager (Hilton and Platt, 2013).An inflexible budget structure decreases creativity and innovation of other worker at lower levels, so it is very difficult for companies to make money for new ideas thus companies faces financial issues.Fixed Budgets: A developed fixed budget is about a basic instrument to evaluate the achievement of private companies both long and short term period of time. Further, a fixed budget supports in keeping the whole business monetarily careful when making little and expenses. In companies like Airdri, this budget is prepared by manager to determine the spending for a single business activity. The execution report is set up by contrasting information from open tasks. Fixed budgets don't change when manufacture level changes within an organisation. Some of the basic advantages and disadvantages are described below:Advantages:Fixed budgeting helps manager to teach other employee, as they had a clear difference between the things they need to do with their workforce.A fixed budget permits a commercial firm to measure both short-term and long-term finances resources that are required on single project.
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