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Requirement of Management Accounting System : Project

   

Added on  2020-06-06

19 Pages4761 Words58 Views
MANAGEMENTACCOUNTING

INTRODUCTION Accounting is identifies as a systematic process of measuring, classifying, recording,interpreting, communicating and summarising financial information or data. It shows the lossincurred or profit earned during accounting time period, nature and value of assets, owners &liabilities, capital or equity (Al and McLellan, 2011). So, management accounting is an activityof accumulation, measurement, identification, communication, interpretation, preparation andevaluation of data that help managers in making particular judgement within the structure offulfilling business organisational objectives. This report is based on Bizdaq which was found in the year 2015. It is a small andmedium sized organisation that has an annual turnover of £100,000. This project discussed aboutthe requirement of management accounting systems and its benefits to business. In calculation ofmanagement accounting reporting, company uses different methods which are shown in thisstudy. Calculation of absorption and marginal costing are determined in this report. Planningtools are described here as well that are very important and beneficial for company to solvefinancials issue systematically. Management accounting tool helps the business manager in orderto sort out all financial issues effectively. TASK 1P1. Explanation of management accounting and essential requirements of its various kindsManagement accounting: It is known as the application of proper concepts andtechniques in projected economic information and processing historical data of an organisation(Management accounting, 2017). It helps the administration in establishing effective plans foracceptable objectives or goals in rational decision making with a scene towards these targets(Albu and Albu, 2012.). It is very important and essential for company for identifying,presenting, recording and analysing the financial data so that internal administration will use itfor the judgement making, planning, designing and monitoring of organisation. Through management accounting, firm is capable to operate their business operations andfunctions in an efficient and effective manner which assists them in enhancing the financialstability. Manager is the main part of company’s success and growth because they play a vitalrole in analysing proper accounting data which help in understanding the financial position offirm accurately. This will also support in decreasing the risk and maximising opportunities of1

generating more profit. Therefore, accounting plays a critical duty in the development ofbusiness for longer duration. In order to plan an effective decision about minimising theoverhead expenses and additional cost, Bizdaq needs to measure its financial executioneffectively. In this, manager is required to formulate accurate report which assist them in guidingto gain desired objectives and targets (Arjaliès and Mundy, 2013). Administrator of the businessorganisation is is emphasis on enhancing present technology and innovate the latest technologyin order to acquire good results. Objectives of management accounting: One of the main motives of accounting is to giveaccurate and right information about financial position of company. It assists the manager inorder to take better judgement for development and growth of company. There are also someobjectives of accounting that are given as below: Assistance in designing and articulation of future plan and policies To help in the understanding of financial data and information To help in monitoring the business performance and motivating workers Communicating accurate information in Up-to-dataThere are different kinds of accounting systems which are needed by the manager incontrolling business functions and operations in an effective manner. These are described asbelow: Cost accounting system: This kind of system is mainly used by the manufacturers andretailers to record manufacturing process following a perpetual inventory technique (Arroyo,2012). Main objective of company is applying this aspect for controlling cost, ascertaining,profitability and other different features which take place in operational and productionactivities. For instance: product manager of Bizdaq uses different types of costs such as standard,normal and actual price to analyse the expenses in production activity. Inventory management: This system is identified as an ongoing activity of transferringproducts and services in and out of a business location. Main objective of business organisationis selecting this technique for reducing the additional cost of inventory. It is essential thatBizdaq’s leader maintains the entire process of inventory manufacturing process (Baldvinsdottir,Mitchell and Nørreklit, 2010). Therefore, the administrator of company needs to handle businessinventory on regular basis. 2

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