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Management of accounting Assignment

   

Added on  2021-02-17

19 Pages6043 Words20 Views
ManagementAccounting

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1(a): Difference between management accounting and financial accounting:.........................1(b): Cost accounting System...................................................................................................3(c): Inventory management system........................................................................................4(d): Job costing system...........................................................................................................4(e): Different types of management accounting reports.........................................................5(f): Need for a sound accounting system................................................................................6TASK 2............................................................................................................................................6Cost:.......................................................................................................................................6(a):...........................................................................................................................................7(b)...........................................................................................................................................8(c):...........................................................................................................................................8TASK 3............................................................................................................................................9(a): Various types of planning tools.......................................................................................9(b): Financial issues................................................................................................................1CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6

INTRODUCTIONManagement accounting is the analytical framework that involves determining,analysing, interpreting and presenting of accounting information that is gathered with the help offinancial and cost accounting (Amidu, Effah and Abor, 2011). This information provided bymanagement accounting aids the management in the process of decision making, formulatingpolicy and routine tasks of a firm. The project is based on the case study of Ever Joy Enterprisethat deals in leisure and entertainment industry in UK. The firm has approached Deloitte UKwhich is one of the leading professional services network providing financial advisory to preparea draft for their management accounting department. The report will present a deepunderstanding of concept of management accounting system, its types and roles. Further adetailed explanation about various management techniques will be provided along withexplanation of various planning tools and their use and advantages/disadvantages. Moreover, acomparison of ways in which firm can apply management accounting in responding to itsfinancial problems will be discussed. TASK 1 Management accounting: It is a function of monitoring and tracking internal expensesof a business process that enables management to take reliable and relevant decisions regardingproduction, operations and investment. According to ICMA, UK, management accounting couldbe describing as the application of professional knowledge and skills for preparing accountinginformation that assist organization in preparing policies, planning and managing the businessoperations. It is making use of various methods, systems and techniques for effectively selectingbest course of action among various alternatives and to exert efficient control by evaluating andinterpreting performances (Booth, 2018). Management accounting is often mixed up withfinancial accounting however both of them differs from each other.(a): Difference between management accounting and financial accountingBasisofcomparisonManagement accountingFinancial accountingMeaningManagement accounting analysefirm's financial information for thepurpose of preparing reports, budgetsetc. for internal and confidential useFinancial management on other hand,concentrates on developing informationfor external parties such as stockholders, government, investors etc.1

by company's management indecision making activity. MandatoryIt is legally mandatory for a companyto follow. It is compulsory for company to adoptfinancial accounting. Time frameFinancial statements are used toprepared at the closing of accountingperiod which are mainly for one year.The reports are made as per therequirements of an organisation.Publishing andauditing Neither published nor audited by anylegal bodies.It must be needed to published andaudited by statutory auditors. Objectives To help the management in planningand effective decision making processby providing detailed data on severalissues.To deliver financial data to the externalparties.Role of management accounting One of the major role of management accounting is to gather, record and report financialdata from various organisational departments, to formulate and analyse their budget andprovide recommendation related to funding and resource allocation ( Callahan, Stetz andBrooks, 2011). Thus, management accounting helps managers to evaluate firm'sfunctioning capital and availability of total funds that aid them to take various decisionsrelated to investment, sources of funds, manufacturing of goods and so on. Another role of management accounting is that it helps in exerting effective control byformulating performance reports and control reports that highlights gaps/deviationbetween the actual and expected performance. These reports assist managers to takecorrective actions for eradicating the gaps and to efficiently handle operations. Thus, it is significant for Ever Joy enterprise to implement and integrate management accountingsystem within its business to ascertain efficacy of cost of their operations, budgets, performanceand then to allocate the limitedly available funds accordingly in manufacturing, sales andinvestments. This will help firm to maintain strong financial base in competitive marketdynamics by timely to identify performance deviation and to take appropriate corrective actions.2

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