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Principle and Importance of Management Accounting : Report

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Added on  2020-06-06

Principle and Importance of Management Accounting : Report

   Added on 2020-06-06

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MANAGEMENTACCOUNTING
Principle and Importance of Management Accounting : Report_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Principle of management accounting and importance of management accounting inorganisational context.................................................................................................................1P2. Different methods and techniques used for management accounting reporting...................2TASK 2............................................................................................................................................4P3 Analysation of profit by using absorption and marginal costing technique..........................4TASK 3............................................................................................................................................5P4 Advantages and disadvantages of various type of planning tools used in budgetary control5P5 Ways in which organisations could apply the management accounting to respond financialproblems......................................................................................................................................7CONCLUSION ...............................................................................................................................8REFERENCES................................................................................................................................9
Principle and Importance of Management Accounting : Report_2
INTRODUCTIONManagement accounting is a concept adopted by the managers and accountants to supportthe structure of organisation (Routledge, Tucker and Lowe, 2014). As per chaining businessrequirement scope of management accounting has become vast. Objective of this project is todefine the principle of management accounting which is applied on organisations. Importance ofmanagement accounting subject to integrate accounting system within an organisation. Varioustypes of methods used for management accounting reporting are also defined in this context.Calculation of profit by using marginal and absorption costing are discussed here as well.Advantages and disadvantages of planning tools used in budgetary control are also elaborated.Ways to adapt management accounting system within organisation are also illustrated here.TASK 1P1. Principle of management accounting and importance of management accounting inorganisational contextManagement accountingManagement accounting system is a tool used in organisation to assist managers andaccountants to deal with day to day business transactions and business problems. Various typesof definitions and descriptions are given in respect of management accounting system andmanagement accounting principles. Basically, the management accounting principles are formedto support the structure of business subjected to decision making, strategic planning and internalbusiness process with utilisation of resources as well as capacity of organisation to improve thedecision support system to accomplish organisational goals. Features of management accountingManagement accounting remain Helpful in decision makingProvides accurate information and details rather then decisionsIt has selective nature it assist managers and accountants to make effective plans to attain objectivesthis accounting system basically remain associated with future events and forecastit increase the efficiency level oforganisation in respect of performanceManagement accounting system (Chart)1
Principle and Importance of Management Accounting : Report_3
Management accounting principles1.Designing and compiling: this principle helps to present relevant approach in respect ofretaining financial records, reports and on the basis of past evidence. 2.Management by exception: this principle helps to prepared budgets and forecastingfuture events in respect of analysing expected revenues and expenditures.3.Accounting for inflation: As per this principle situation and challenging equations areanalyse to control inflation. It helps to maintain value of capital contributed by theowners are defined. 4.Utility: this principle indicates that organisation should remain consistent with itsaccounting principles and aspects.5.Integration: this principle helps to communicate accounting information with effectiveuse at maximum at the same time. There are two basic accounting principles used in organisational context such as: Causality Principle: This is the principle used to correlate management objectives. Thisprinciple helps to evaluate the requirement of input and output resources within organisation.This principle works on the cost based relations between the outputs and inputs consumed within the organisation (Kotas, 2014). This principle is used in large manufacturing and serviceproviding organisations. Casual relations are also found subject to fulfilling cost needs. This is2
Principle and Importance of Management Accounting : Report_4

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