Management Accounting and Budgetary Tools for Financial Management

UNIT 5 ASSESSMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Explaining the principles of management accounting and the importance of integrating
management accounting systems within an organization............................................................3
2. Different methods and techniques used for management accounting reporting .....................4
3. Advantages and disadvantages of budgetary tools..................................................................6
4. How organizations adapt management systems in order to respond to financial problems....7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting is defined as the practice of measuring, analysing, identifying,
interpreting and communicating the financial information and resources to managers in order to
achieve the organizational aims and objectives. It is used by the internal team of the organization
with an objective to use this statistical data in order to take better decisions and ensure effective
decision making of the organization. The current report will be based on Eastern Engineering
Co. Ltd. which is a successful medium- sized enterprise in the manufacturing sector. It will
explain the principles of management accounting and the importance of integrating management
accounting systems, different methods and techniques used for management accounting,
advantages and disadvantages of budgetary tools and how organizations adapt management
systems to respond to financial problems.
MAIN BODY
1. Explaining the principles of management accounting and the importance of integrating
management accounting systems within an organization
Principles of management accounting
The management accounting principles are developed in order to serve the main
requirements of internal management, improve business processes, decision making, customer
value and capacity utilization which are needed to achieve corporate goals of an organization
(Abednazari and et.al., 2018). They are designed to help businesses in managing the chaotic
accounting processes and promote long term profitability of the organization. These principles
are as follows:
Designing and compiling:
This principle explains that the accounting records, information, statements and all other
evidence of results should be properly compiled and designed to meet the needs of specific
problem or a particular business. The management accounting system is designed in a way to
present relevant data in order to solve a particular problem. Also, the accounting information can
be change and adopted by the company to meet the requirements of the management.
Management by exception:
The principle of management by exception is followed when the information is presented
to the management. It means that the standard costing techniques and the budgetary control