Management Accounting: Planning Tools, Financial Problem Solutions

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
 Introduction
 Planning tools used in management accounting
 Ways in which organizations can use management accounting to solve
financial problems
 Conclusion
 References

ADVANTAGES AND DISADVANTAGES
OF PLANNING TOOLS
 Budgets-
 A budget is an estimate of expenditures and incomes over a fixed period
of time. J Rotherham can prepare different types of budgets which will
help them in planning for their operations.
 The budgets which they can use are as follows-
 Cash budget- A cash budget shows the estimate and forecasts of cash
revenues and expenses over a fixed period of time.
 Operational budget- An operational budget can be used by J Rotherham
to keep a track of its operational revenues and incomes.
 Master budget- A master budget refers to an aggregation of other lower-
level budgets to form a comprehensive forecast and estimate of revenues
and expenditures.

ADVANTAGES AND
DISADVANTAGES OF BUDGETS-
 Budgets help management in timely analyzing the problems present in
the system for their eradication.
 Budgets provide a tool through which policies and decisions of the
management can be thoroughly tested.
 Budgets make use of approximations and estimates which can lead to
inaccuracy in results.
 The success of budgets depends upon cooperation and coordination
between different departments of a company otherwise it would not give
accurate results.