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Management Accounting in ABC hotel

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Added on  2019-12-28

Management Accounting in ABC hotel

   Added on 2019-12-28

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Management Accounting
Management Accounting in ABC hotel_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3TASK 2............................................................................................................................................4(a) Cash budget............................................................................................................................4(b) Budgeted income statement...................................................................................................6(c) Budgeted statement of financial position...............................................................................6TASK 3............................................................................................................................................7CONCLUSION..............................................................................................................................102
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INTRODUCTIONManagement accounting is referred to as the process of preparing management reports aswell as accounts that offer accurate and timely information relating with finances and statistics(Gill and Biger, 2013). This is required by the business to make day to day as well as short termdecisions. In the present study, management accounting has been discussed in context of ABChotel. The report involves the need for budgeting. Further, it includes preparation of documents.In addition to this, the present study also involves techniques of investment appraisal so thatdetermination can be made regarding selection of the most suitable investment project. TASK 1Carrying out business operations requires the owners to plan and review their finances.There is greater need for budgeting within the organization that has been enumerated below: Facts: This is related with representing detailed analysis of the ways in which business isexpected to spend money in future time span (Grier, 2007). Several organizations developbudget annually so that expected needs of every department can be outlined within thefirm. Limit expenditures: A major advantage of using business budget relates with the ability tolimit the amount that needs to be spent on certain operations (Nikbakht and et.al, 2006).The role of budget is effective in determining the expenses in order to ensure that capitalis not wasted on items that are not essential. Plan for future growth: The need for budgeting can be greatly viewed towards planningfor the future growth of business and expansion (Hansen and Otley, 2003). Budgetingregarding future growth opportunities makes sure that firms possess capital on hand whenquick decisions are required to be made in relation to the expansion of businessoperations. Process of preparing budgetThere is a certain process followed in preparation of budget. This includes the following:Obtaining estimates: It includes obtaining of the sales, production levels, expected costsas well as availability of the resources for every sub division. The discussion regarding3
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this can be informal or written reports of plan that is submitted to the budget committeefor approval. Coordinating estimates: Another step relates with the evaluation of different planssubmitted by several organizational units in order to determine the potential plan in theentire interest of the business. Communicating budget: Communication of the budget to the responsible managers andconcerned departments is another step (Harris and Mongiello, 2012). After that, budgetplan is being approved in the light of organizational goals and availability of resources. Itis being communicated to the departments and responsible managers. Implementing the budget plan: The final budget is being presented to the manager and isadopted as a plan of operation for coming budget period. Reporting interim progress towards budgeted objectives: In accordance with thefeedback in budgeting process, performance reports are being prepared by firm so thatdepartmental managers can be informed regarding the performances achieved in relationwith budgeted figures (Milisn, 2009). LimitationsInaccuracy: The process of budgeting is based upon lots of assumptions that are relatedwith the estimation of expenses and revenues. They are on the basis of trends andscenario of market that exist while making budget (Nobanee, Abdullatif and AlHajjar,2011). Further, they are based upon predictions made for the coming year by taking intoaccount data available at the time of budgeting. TASK 2(a) Cash budgetCash Budget for the period of 6 monthsParticularsPre-operating year JanuaryFebruaryMarchAprilMay JuneTotal Cash revenues Cash sales 80000816008323285728.9688300.828890949.853664509811.642464Bank loans 25000002500004
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