Management Accounting Assignment (Zylla company)
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Added on 2020-11-12
Management Accounting Assignment (Zylla company)
Added on 2020-11-12
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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Management Accounting and essential requirements of various accounting systems.........1P2. Different Methods for Management Accounting Reporting.................................................3TASK 2............................................................................................................................................4P3. Implementation of suitable Cost Analysis techniques to generate Income Statements........4TASK 3............................................................................................................................................8P4. Merits and Demerits of various planning tools used for Budgetary control.........................8TASK 4..........................................................................................................................................11P5. Comparing adaptation of Management Accounting Systems in response to financialproblems....................................................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................14APPENDICES...............................................................................................................................15
INTRODUCTIONManagement or Managerial Accounting refers to the systematic acquisition,classification, interpretation and presentation of financial information to the management so thatthey are able to make informed decisions and formulate policies. This is mainly related tointernal processes that help in proper coordination and control of activities so as to generatemaximum profits for the business. This report essentially discusses the various types ofaccounting system employed by the companies, their role in formation of income statements,budgetary controls and resolution of financial problems. In order to depict these with clarity, adynamic organisation, Zylla has been chosen whose management is looking for revamping of itsaccounting system so as to make it more relevant to the changes that have occurred in itsoperations over the years.TASK 1P1. Management Accounting and essential requirements of various accounting systemsManagement Accounting:Management Accounting can be defined as the process of collecting, recording andreporting of business transactions and relevant statistical data so as to advance decision-makingamong the managers of an enterprise (Apak and et.al., 2012). Management Accounting Systemsare one of the supporting structures that enable decision makers to form strategic conclusions.This is achieved through the preparation and interpretation of relevant information as well astheir communication in the form of internal reports. These reports are usually maintained foreach management function operative in the organisation such as Finance, IT, PurchaseDepartment and others.As the company needs to take into account all the relevant factors before coming to aconclusion, it is important to integrate such reports in a comprehensible manner. This wouldrender a wholesome view of the critical areas that are required to be considered during thedecision-making process. The concept of management accounting can be dated back to the 19thCentury, Industrial Revolution. Since then it has undergone a lot of changes. In present scenario,this framework plays a crucial role in connecting all functional activities of an enterprise by acommon thread. 1
In general, management accounting tends to facilitate two important roles. One is toprovide meaningful information to the decision-makers and other is to influence as well asfacilitate judgements through communicating the results derived from them. It informs themanagers regarding important parameters that enable budgeting, investment appraisals,forecasting, cost analysis for a given time period in an effective manner. However, one shouldnot confuse this concept with that of financial accounting. These terms may be usedinterchangeably but have some features that distinct them from one another. They are:Basis Management AccountingFinancial AccountingAggregationConcerned with internal processes that areemployed to enable aggregation ofimportant accounting information.Relates to aggregation ofaccounting information throughpreparation of financial statements.ReportingFocusConcerned with internal reports as well asefficiency and their communication thereofto management.Oriented towards preparation offinal reports and theircommunication to stakeholders.SystemsInvolves locating bottlenecks in operationsof a business as well as resolving them.Concerns itself with final outcomerather than the process involved ingenerating that outcome.Types of Management Accounting System:An organisation may have different types of internal systems in place based on theirorganisational needs and preferences. However, the management accounting systems can bewidely classified under following four heads:Cost-Accounting Systems:This system assists in determination of costs to enablemanagers in identifying various profit centre. Additionally, it provides essential controlmetrics in regards to inventory valuation so as to maintain economies of scale in theenterprise. It helps in efficient budgeting of inputs in relation to outputs by criticallyexamining individual products, services or jobs of different departments or operations ina reasonably accurate manner (Chenhall and Moers, 2015).Inventory Management Systems:Inventory Management system is one which helps inkeeping check of the stock located in company's warehouse so as to avoid overstock orunderstock situations at any given point of time. By efficiently tracking stock quantities,2
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