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Management Accounting and Essential Requirements- Doc

   

Added on  2020-10-05

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MANAGEMENTACCOUNTING

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and the essential requirements of different types of managementaccounting system..................................................................................................................1P2. Different methods used for management accounting reporting.......................................3M1. Evaluation of benefits of management accounting systems...........................................4D1. Management accounting system and management accounting reporting integrated withinorganisational processes.........................................................................................................5TASK 2 ...........................................................................................................................................5P3. Appropriate techniques of cost analysis to prepare an income statement........................5M2. Range of management accounting techniques and producing appropriate financialreporting documents...............................................................................................................9D2. Financial reports which are applied to interpret data for business activities...................9TASK 3............................................................................................................................................9P4. Uses of different planning tools in management accounting...........................................9M3. Analysing different planning tools and their applications............................................13TASK 4..........................................................................................................................................13P5. The way organisation use management accounting system to respond to financialproblems...............................................................................................................................13M4. Management accounting in response to financial problems which leads organisation tosustainable success...............................................................................................................16D3. Various planning tools to resolve financial problems...................................................16CONCLUSION..............................................................................................................................16REFERENCES .............................................................................................................................17

INTRODUCTIONManagement accounting is a system which helps in analysing costs and operations for thepurpose of preparing the internal reports and maintaining the records. Such reports and recordsare used by the managers to take critical decisions and formulate day to day plans. Suchaccounting is required in any firm to present all the financial as well as non financialinformations for assisting for preparing strategies for future along with growth. To understandthe accounting techniques, Merlin Financial Consultants is selected. The selected consultancyfirm is located at Eagle Street, London, UK and catering its services from the year 1988 whichprovides financial services along with assistance and formulates financial future plans forindividual as well as small companies (Banerjee, 2012).This report consists of detailed information related to management accounting, differenttypes of management accounting systems, management accounting reports. Further, it includescost analysis using appropriate technique for preparing income statement. In addition,advantages and disadvantages of different types of planning tools for budgetary control andmanagement accounting approaches used to respond towards the financial problems leadingtowards sustainable success. TASK 1P1 Management accounting and the essential requirements of different types of managementaccounting systemManagement accounting:Management accounting is a process of identification,analysis, measurement, recording, interpretation as well as communication of the financial andnon financial information in the organisation for the purpose of preparing financial statementsand taking decisions for the future along with day to day operations.Management accounting system: It is framework of preparing the internal reports andkeeping record of financial statements to provide timely as well as accurate information forplanning and controlling the activities to achieve profitability. Origin, role and principles of management accounting:Origin: Management accounting has first started its functions during the industrialrevolution in the 19th century. During such period, there was little control of stakeholders andfinancial debts along with little need of internal reports. Management accounting acted as an1

essential tool for providing necessary information. With the passage of time, such accountingspeed up its practices and new innovations are formed in their usage.Role: Management accounting plays significant role in performing the series of varioustasks related to planing, organising, coordinating, controlling, communicating, and interpretingthe financial information for decision making. Principles: Management accounting includes the following principles:Influence: Communicates the information which influences the working. Relevance: Scans the available resources which are relevant to decision making.Value: Analyses of information which generates value. Trust: Administration helps in building trust.Distinguish between management accounting and financial accountingBasis of distinguishManagement accountingFinancial accountingPurposeTo provide accurate and timelyinformation to the managersfor planning, controlling alongwith decision making.To provide the financialposition of the organisationwith other firms.Focus of informationIt focuses on financial as wellas non financial information.Only focuses on financialinformation.NatureReports are prepared afterconsidering all the past alongwith current performances.Prepares reports on the basisof past information.Different types of management accounting systemsManagement accounting systems are the tools which are used for measuring andevaluating the management operations (Contrafatto and Burns, 2013). Various types ofmanagement accounting systems are the following:Cost accounting systems: Such system is used to estimate the different costs associatedwith the production process. It helps in identifying different ways to reduce these costsfor achieving profits. The essential requirement Merlin Financial Consultants is to recordand examine the cost structure by divide the costs of various commodities with differentclients.2

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