Management Accounting: Planning Tools and Adaptation to Solve Financial Problems

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Question 1....................................................................................................................................1
Question 2....................................................................................................................................3
Question 3....................................................................................................................................3
Question 4....................................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Management accounting refers to providing of financial information and resources to
management of a company to aid them in the decision-making process (Alsharari, 2017). For this
project, Asda has been selected which is a British supermarket dealer. In this report, specific
analysis will be made on explaining the use of planning tools and comparison of ways in which
organisations adapt to management accounting systems for solving their problems.
MAIN BODY
Question 1
Budgetary control refers to a process of determination of results by budgeting figures of a
company for the future period and then comparing it with actual performance to find out
deviations (Liff and Wahlstrom, 2018). Asda's management can use this technique to ensure that
its actual results are according to the standards set and if there is any variance then rectifying
measures can be taken by it to improve performance.
Types of budgetary control systems-
Cash budgeting- Cash budget refers to an estimate of cash receipts and payments for a
certain period of time. It can be used by Asda to ensure that its liquidity levels are maintained
and there is no shortage of cash.
Advantages-
 It helps in better management of cash.
 Potential deficits can be identified easily.
Disadvantages-
 This system reduces the flexibility level in the company.
 It can be easily manipulated.
Capital budgeting- Capital budgeting is used to determine the projects where investment
should be done to maximise returns of business. Asda's management can use it to make sure that
its funds are invested in the right project.
Advantages-
 It helps in determination of risks.
 It enhances decision-making abilities.
Disadvantages-
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