Advantages and Disadvantages of Budgetary Control Tools

Management Accounting
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Contents
TASK 1.......................................................................................................................................................3
Section (A) Understanding of management accounting systems.............................................................3
Section(B) Methods used for management accounting reporting............................................................6
TASK 2.......................................................................................................................................................7
Calculation of Income statement using marginal and absorption costs....................................................7
TASK 3.....................................................................................................................................................10
Report on advantages and disadvantages of different types of planning tools for budgetary control.....10
TASK 4.....................................................................................................................................................12
Use of management accounting system to solve financial problem.......................................................12
CONCLUSION........................................................................................................................................15
REFERENCES........................................................................................................................................17
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INTRODUCTION
Management accounting is defined as a process of analyzing financial statements which
includes profit and loss account, balance sheet, cash-flow statement etc. so as to frame an
effective plans and policies for the achievement of an organizational goals and objectives. It gets
supported by financial accounting who is liable to prepare final accounts on annual basis. The
concept of management accounting plays an important role in strengthening financial position of
organisations by contributing efforts in improving financial performance and sustain in
competitive market for longer period of time. The present assignment report is based on Excite
Entertainment Ltd. which is engaged in leisure and entertainment industry in the UK. The
report discusses the various systems and reporting of management accounting along with their
application within an organization. Along with this, the report also briefly explains different cost
accounting methods and its suitability for an organization, planning tools to control budget in
addition with this merits and demerits, application of management accounting systems to resolve
financial issues faced by an organization etc.
TASK 1
Section (A) Understanding of management accounting systems.
(a) Difference between management accounting and financial accounting system
Management accounting system : Management accounting system is the process of identifying
the cost of the operations and the activities which helps in formation of the financial reports. The
reports which are formulated helps the management in decision making.
Financial accounting system : It is a system which helps in analysing the financial information of
the organisation which will help them in preparing financial statement and decision making.
Comparison between management accounting and financial accounting system:
Basis Management accounting system Financial accounting system
Legal
requirement
There is no legal req1uirement to
follow this system in the organisation.
It is compulsory for the organisation
to follow the financial accounting
system as it helps them in formation
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of financial statements.
Format of
presentation
This accounting system do not have an
specific format in which the reports has
to be presented.
On the other hand, accounting system
requires to follow the specific format
which is been specified in the acts that
regulates them.
Types of data
used
The kind of data that is used in this
system includes both financial and non
financial information.
In this financial accounting system
only financial data is used to prepare
the reports.
.
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