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MANAGEMENT ACCOUNTING INTRODUCTION 3 TASK 13 Introduction of management accounting system

   

Added on  2020-10-22

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MANAGEMENTACCOUNTING
MANAGEMENT ACCOUNTING INTRODUCTION 3 TASK 13 Introduction of management accounting system_1
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3Management accounting and various kinds of accounting systems............................................3Various kinds of management accounting reporting..................................................................3Benefits of management accounting system...............................................................................4Integration of management accounting system and reporting system........................................5TASK 2............................................................................................................................................5Practical.......................................................................................................................................5TASK 3............................................................................................................................................8Advantages and disadvantages of planning tools........................................................................8Use of different planning tools ...................................................................................................9TASK 4............................................................................................................................................9Use of management accounting system to respond to the financial problems...........................9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
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INTRODUCTIONManagerial accounting or the management accounting may be defined as the use of theaccounting information and all the financial statements in order to make the decisions for thecompany and its growth. This case study is on the company ABC Ltd which is a medium sizedcompany in the manufacturing sector. The present study will discuss about the different kinds ofthe management accounting system along with the different types of management accountingreporting (Alsharari, Dixon and Youssef, 2015). Further it will outline some advantages and thedisadvantages of the planning tools and their use in the company. At last it will highlight thathow management accounting system helps in solving the financial problems.TASK 1Management accounting and various kinds of accounting systemsThe management accounting is a concept wherein the management of the company takesthe important decisions regarding the operations and the working of the company with help ofanalysis and evaluation of the financial information and the financial statements. There are manykinds of management accounting system which are discussed in the following points-Job costing system- the job costing relates to the estimation of cost of every job in theproduction process to ascertain the actual cost of producing the product. The job costing systemworks in gathering three types of cost that is direct labor, overhead cost and direct materials. Thisis required by ABC Ltd in order to maintain all the cost relating to the job.Inventory management system- this involves the management of the inventory in thebusiness through the recording of the inflow and outflow of the raw material and finished goods.This helps in the planning of the production of goods by production department.This is requiredby ABC Ltd in order to maintain all the cost relating to the inventory and the finished goods.Cost accounting system- it refers to the recording of the cost of production of anyproduct. This system is used by the company in order to estimate all the cost which may beincurred by the company relating to the products like production cost, management cost,inventory cost and many other costs. This is required by ABC Ltd in order to maintain all thecost relating to the whole organization.Various kinds of management accounting reportingThe management accounting reports are the documents or the reports which are preparedin order to store and record all the data relating to management and operations of the company
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on daily basis and then analyzing that data in order to take the decision (Armstrong, 2014). Thesetypes of reports are then used to interpret and evaluate the data and to take the decision relatingto management. The different types of management accounting reports are as follows-Job cost reports- these are the types of reports which are prepared in respect of aparticular job or project (Boučková, 2015). This report helps the management of the ABC Ltd inknowing and evaluating the requirements and the profitability of all the jobs and their operations.Budget reports- these are the most crucial for the company which is to be prepared. Thisis because of the reason that it helps the owners of the company ABC Ltd in beforehandunderstand and control all the estimated cost so that losses can be minimized.Account receivable report- the accounts receivable reports shows the cash flow withinthe company ABC Ltd. By the continuous evaluation of the accounts receivable reports thecompany can handle its collections effectively and there can be no overlooking of the debtors. Benefits of management accounting systemThe management accounting system refers to a system which is internal to theorganization and is used to manage the company and takes the decisions for the growth and thebetterment of the company. With the application of the management accounting the company canhave many benefits. Some benefits are as follows-The management accounting systems like job costing, cost accounting etc. helps thebusiness in doing proper planning relating to the business because the budget helps thecompany in taking more effective and efficient decisions (Quattrone, 2016).With the help of the management accounting system much information can be depicted inthe form of charts, bar, diagrams so it helps in proper forecasting, analyzing andevaluating the managerial policies and strategies used.Through the management accounting system there is two way communication in ABCLtd. The top management plans and delegates work to lower staff. Also, lower staffprepares reports and submit it to top management. This two way communication inducessense of responsibility and also improves work conditions.Because of the proper recording and reporting of data on time there is always timely dataavailable as and when needed which increases the functionality of task there byimproving efficiency of organization. (Kaplan and Atkinson, 2015).
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