Management Accounting Methods Doc

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Define management accounting and different types of management accounting systems...3P2 Different methods used for management accounting............................................................5M1 Benefits of management accounting systems and their application....................................6D1 Management accounting systems and management accounting reporting is integrated.......7TASK 2...........................................................................................................................................7P3 Calculate costs by using appropriate techniques of cost analysis..........................................7M2 Management accounting techniques and financial reporting documents.............................9D2 Financial reports that accurately apply and interpret data...................................................10TASK 3..........................................................................................................................................10P4 Advantages and disadvantages of different types of planning tools....................................10M3 Use of different planning tools and application for preparing and forecasting budgets.....12D3 Tools for accounting respond appropriately to solving financial problems........................12TASK 4..........................................................................................................................................12P5 Organisations are adapting management accounting systems to respond to financialproblems...................................................................................................................................12M4 Responding to financial problems, management accounting.............................................14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONManagement accounting is a process of evaluating business and operational costs in orderto formulate internal financial report, accounts and records. This information aid managers indecision making process for accomplishing firm's goals and objectives. Management accountingencompasses with formulating and providing timely financial and statistical information tomanagement as they accomplish day to day operations. Furthermore, Management accountingreports are also usually confidential and acquired for iinternal decision making process only(Abugalia, 2011). The present assignment is based upon Pavestone which manufactures anddistribute concrete products for commercial, contractor, residential and retail consumer markets.The firm also offers stone and brick paving products,, i.e. patio stones, concrete pavers, freestanding wall system etc. Apart from this, the present assignment is going to be described typesand methods of management accounting system. Various techniques of cost accounting whichhelps to prepare an income statement will also discuss. Furthermore, readers will also come toknow about advantages and disadvantages of planning tools of budgetary control. There will bediscuss the role of management accounting system to respond towards financial problems.TASK 1P1 Define management accounting and different types of management accounting systemsDefinition– Management accounting is a branch of accounting which provides critical ornecessary information to top management in a systematic way. It will assists to perform their alloperations and functional areas, i.e. planning, organising, directing as well as taking businessdecisions in proper way.In present corporative world, management accounting has become an essential part formanagement. Its a process of developing managerial reports and statements in order to obtainaccurate financial information which is required to complete daily business operations as well astake short term decisions (Basel, 2012). Management accounting supports to set performancestandards of company with actual outcomes; it also creates monthly and weekly reports forinternal people of an organisation, i.e. employees and managers. It determines, evaluate, assess,interpret and communicate information which enable Pavestone to pursue its strategic goals andobjectives. Although, management accounting is differ from financial accounting, whilefinancial accounting render information to people inside and outside of the organisation whereas
management accounting aimed is to assist managers inside the organisation as they can takemake or buy decisions.Furthermore, management accounting also helps in forecasting or predictions regardinginvestments, diversification into market segments and make or buy decisions. This implies tomake forecast about future trends within business. It is essential for management to makepredictions toward cash flows and recognise its impact upon company's operation's in future.Management accounting comprises with formulation of budgets and trend charts so thatmanagers can decide how to allocate resourcesInformation provided through management accounting is changes in stock, raw material,financial data and then analysis the entire information in order to make imperativebusiness decisions(Management Accounting, 2015).Management accounting system are effective and flexible in nature for obtaining accuratedata and information. It will be beneficial for Pavestone to accomplish all operations andworking activities in fast and accurate manner.This accounting practice is also beneficial for staff members of the company as theycontinuously get aware with financial position of the company at market-place. Thishelps them to work for obtaining firm's goals and objectives.Types of accounting systemCost accounting system-This accounting system is beneficial for companies to evaluateestimated product costs with the assistance of using profitability analysis, valuation and costcontrol approach. Along with this, cost accounting system is acquired by manufactures thus tokeep track of production activities by using a perpetual inventory system. It helps to determineflow of inventory in business organisation in different stages of production. In context ofPavestone, cost accounting system aids to estimate the cost of their products for conductingprofitability analysis, inventory valuation and cost control. There are different types of costaccounting methods, such as – job order costing, process costing, activity based costing systemetc.Inventory management system –This management accounting system helps to keeptrack of goods by evaluating entire supply chain in which a business operates. It covers allaspects from manufacturing to retail, movements of stock one place to another and warehousingto shipping. It allows to make better decisions and investments. Two main tools of inventory
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