Management Accounting in Pine Ltd : Report
Added on -2020-07-22
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Management Accounting
Table of ContentsINTRODUCTION......................................................................................................................3a. Defining and explaining budgeting....................................................................................3b. Identifying different types of budgeting methods which are available to Pine Ltd...........3c. Stating the advantages and disadvantages of different types of budgeting methods.........4D) Explaining process of preparing cash budget which illustration of data set of PineLimited...................................................................................................................................6E) Overriding factors and importance of cash budgets in context with other budgets..........7CONCLUSIONS........................................................................................................................8REFERENCES...........................................................................................................................9
INTRODUCTIONIn the resent times, business organization makes high level of focus on adoptingmanagement accounting tools and techniques. This in turn provides assistance to businessunit in exerting control on cost and thereby maximizes profitability aspects. Budgeting andbudgetary control tools are highly significant which gives indication to the firm about areaswhich demand for control. The present report is based on Pine Ltd which is one of the leadingcompanies that manufacture and sell furniture to the customers. In this, report will shed lighton the budgeting techniques which firm should employ for the purpose of controlling. It alsodepicts the manner in which cash budgets are prepared by Pine Ltd. a. Defining and explaining budgetingBudgeting: It may be served as a financial plan that that reflects the amount whichwill be spent by the firm during the specified time frame. Besides this, budget also indicatesthe sources from which revenue or income will be generated by the firm. Hence, suchspending plan ensures business unit that it has enough funds for performing businessactivities and functions. Hence, with the motive to avoid the situation of debt Pine Ltd layshigh level of emphasis on undertaking budgeting technique (Menifield, C2017). Thus, formaking appropriate forecast of financial requirements or need Pine Ltd prepare budgets.Along with this, such technique also enables firm to take strategic action or measure bymaking comparison of actual performance with budgeted aspects. Further, budgeting alsofacilitates co-ordination among various departments and thereby ensures optimum use offinance. b. Identifying different types of budgeting methods which are available to Pine LtdBudgeting methods can be distinguished into two types such as incremental andmodern that business employs. Hence, by undertaking below mentioned methods Pine Ltdcan prepare budget such as: Traditional budgeting Incremental: Under such budgeting technique, business unit prepares financialframework by considering past years budget. On the basis of such aspect, by adding somepercentage in both income and expenses firm can develop budget. Modern budgeting method:
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