Managing Accounting System and Management Accounting Reporting
Added on 2020-11-12
21 Pages6003 Words416 Views
FinanceLeadership Management
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MANAGEMENTACCOUNTING
TABLE OF CONTENTINTRODUCTION.........................................................................................................................3TASK 1...........................................................................................................................................3P1. Management accounting and its different types of system...................................................3P2. Explain different method of management accounting reporting..........................................4M1. Evaluation of benefits of various management accounting systems....................................5D1 Management accounting system and management accounting reporting are integrated withorganisation process.....................................................................................................................6TASK 2...........................................................................................................................................6P3 .Appropriate techniques of cost analysis to prepare an income statement.............................6M2. Management accounting techniques and financial reporting documents..........................10D2. Financial reports which applies to interpret many business activities................................10TASK 3.........................................................................................................................................11P4. Advantages and disadvantages of different types of planning tools used for budgetarycontrol........................................................................................................................................11M3. Usage of different planning tools for preparing and forecasting budgets..........................13TASK 4.........................................................................................................................................14P5. Organisations are adapting management accounting systems to respond to financialproblems....................................................................................................................................14M4. Management accounting in response to financial problems can lead organisation tosustainable success.....................................................................................................................15D3.Various planning tools to resolve financial problems.........................................................16CONCLUSION............................................................................................................................16REFRENCES...............................................................................................................................17
INTRODUCTIONManagement accounting is also called as managerial accounting or cost accounting. It isthe procedure of analysing business cost and operations for designing internal financial records,reports and accounts which will help manager in decision making process for accomplishingtheir goals and objectives. In simple term it can be said that, management accounting is use forinternal decision making of organisation (Ward, 2012). Financial and non-financial both kind ofinformation utilise for making report as well as there is no specific time duration for preparingand using managerial reports. An organisation can use respective report when they requiredwithout any restrictions. Apart from this, management accounting system is differ from financialaccounting because it help only in internal aspects of business. In this report, Capricorn Wealthmanagement Company is selected which was established in 2008 and its office is atHammersmith London, United Kingdom. Respective organisation provide wealth and financialadvice to their clients and offer several financial products and services, loans, mortgage productsand so on. This report will going to discuss about the concept of management accounting along withtypes and benefits. Moreover, going to focus on several accounting techniques as well asmanagerial reports with their advantages and disadvantage. In the end, ways will be discussedwhich utilise for overcoming from financial issues by effective implementation of severalaccounting techniques. TASK 1P1. Management accounting and its different types of system.Management accounting is type of accounting system which provide assistance inmanagement of organisations internal parts. It is helpful in making managerial report that isrequired within association for designing their important policies and also in making internaldecisions (DRURY, 2013). Along with this, for an organisation it is not mandatory to maintainrespective accounting system it is totally depended on requirement. There are several types ofaccounting system explanation of these are as follows :- Price optimisation system – It is an system which provide framework to organisation foridentifying price of goods and services which is suitable for both company and theircustomer's. With the assistance of price optimisation system reaction of customer's at
different price level has been analysed. Generally main motive of this accounting systemis to provide factors that will assist is setting price. Capricorn Wealth ManagementLimited utilise respective system for setting price of goods and services which isadvantageous for company as well as their customers. Cost accounting system – It is an accounting system which is helpful in determining thecost of products including all the cost such as fixed as well as variable. Capricorn WealthManagement Limited organisation utilise cost accounting system for checking out thecost of several financial goods or services (Wickramasingheand Alawattage, 2012).Thus, it will assist in focusing on those services and products which are beneficial fororganisation.Inventory management system – It is one of the most important accounting systemwithin the organisation because it is related to tracking status of goods as well as services.With the assistance of inventory management system association is able to identifyavailability of products and services. Capricorn Wealth Management Limited implementrespective accounting system with the motive of tracking their product and services. Forinstance, Company want to check clarification of mortgage loan's then in this processinventory management system help in checking. Job costing system – It is the system which involve the procedure of accumulatinginformation related to the cost of production. Job costing system is suitable for thecompanies who are offering variety of products and services. Capricorn WealthManagement Limited is an firm which serving several financial services and products sofor them it is necessary to make estimation of each individual unit cost. Thus, respectivesystem help in analysing the cost of different financial goods and services along withcustomer reaction at various price level. P2. Explain different method of management accounting reporting.There are several types of accounting report which is necessary for company butmanagement accounting have their play important role in relation of internal management ofbusiness (Otley, 2016). This will assist manager of Capricorn Wealth Management Limited intaking important decision and also framing strategies. Management accounting report involve
both monetary as well as non-monetary informations. Respective organisation prepare severaltype of reports are as follows :- Budget report – It is an internal report which is not share with outsiders and budgetreport assist in comparing estimated with actual performance. Along with this, it also aidsin designing future policies as well as strategies for association. Moreover, budgetestimate income and expenses for specific time period and respective firm will followthis in accomplishing their goals and objectives. Cost managerial accounting report – It is an accounting report which provideframework for checking profit and loss from several activities. Cost managerialaccounting report assist in calculating all the expenditure before selling of product andafter that compare with the income from selling (Fullerton, Kennedyand Widener, 2014).Thus, if expenses are more then income it will be loss for company whereas, expenses areless then income it will be profit. Although, Capricorn Wealth Management Limitedutilise cost managerial accounting report with the motive of analysing profit and loss aswell as also for making future policies. Performance report – In simple term it can be said that, performance report is that whichutilise for measuring the performance of something. In relation of managementaccounting, performance report simply means judgement the performance of staffmembers well as organisation for accomplishing predetermined goals (OtleyAndEmmanuel, 2013). It decrease the level of complexity for deciding which personnel iseligible for rewards and who don't. Capricorn Wealth Management Limited apply thisreport in their working for analysing performance of company as well as their employees.Moreover, it will assist manager of respective firm in checking the performance of eachand every individual activity.M1. Evaluation of benefits of various management accounting systems.Advantages of Job costing system - Job costing provide an basis for estimating cost of similar job that will be taken in future. It provide detail analysis the cost of material, overhead and labour for every job as andwhen needed. Advantages of cost accounting system -
Cost accounting system assist in finding out the reason behind high cost in the procedureof goods and services offering.Through this organisation can make cost estimate of products and services which offeringby them. Advantages of price optimisation system -It provide framework through which company can analyse reaction of customers atdifferent price level (Maas, Schalteggerand Crutzen, 2016). Price optimisation system assist organisation in identifying the level of price that will bebeneficial for company as well as customer both. Advantages of inventory management system - This management system is beneficial in tracking status of several goods and services.Inventory management system assists in saving time and cost. D1 Management accounting system and management accounting reporting are integrated withorganisation processIn respect of an organization management accounting reporting that include accountingsystem is very important and necessary. This is so because both of them are linked each othersuch as if an organization want to develop managerial report. For management accountingsystem appropriate data as well as information is necessary. In their is absence of respectivething then companies didn’t able to develop report and also can’t take appropriate decision forfurther activities (Kotas, 2014). In respect of Capricorn Wealth Management Limited theydevelop various management report through adopting different accounting techniques and tools.Along with this it will minimise or reduce complexity of preparing accounting report of acompany. Distinction between management and financial accountingBasisManagement accountingFinancial accountingDefinitionsThis is the system whichfacilitates appropriate data tothe managers in order toformulate plans, strategies aswell as policies forperforming businessIt is an accounting systemwhich concentrates onfinancial statement preparationfor providing finanacial data tointerested parties.
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