Management Accounting

Running head: MANAGEMENT ACCOUNTING
Management accounting
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1MANAGEMENT ACCOUNTING
Table of Contents
Part I...........................................................................................................................................2
Part II..........................................................................................................................................5
Reference....................................................................................................................................6

2MANAGEMENT ACCOUNTING
Part I
Three purposes of budgeting are –
Three purposes of budgeting are forecasting the expenses and income and thereby
forecasting the profitability. It can be used as a tool for the purpose of decision making. It can
further be used as a tool to monitor the performance of business (Kaplan & Atkinson, 2015)
Purposes of different budgets –
Master budget integrate, co-ordinates activities of different functional areas of the
organization and helps the employees to achieve gaol through communicating and
motivating. Planned operating budget helps in forecasting the operational expenses and
revenues and helping the management with planning process (Kaplan & Atkinson, 2015).
The financial budget facilitates in coordinating the activities among the departments along
with aligning the activities to big picture of the entity’s strategic plan.
Relation of budgeting with management by exception concept
MBE (Management by exception) is the practice where the significant deviations
from the budget are only bought into the management’s attention. The main objective behind
this is to draw attention of the management in the areas only those are in need of the action.
Five basis principles to prepare meaningful budget
Five basis principles to prepare meaningful budget are clear lines for the
accountability, responsible fiscal management, good information regarding finance,
flexibility to respond to the challenges over short term period and make a plan for the long-
term vision and stability in the process of decision making (Kaplan & Atkinson, 2015). Each