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Management Accounting for Small Business : Report

   

Added on  2020-01-16

17 Pages5577 Words160 Views
Management Accounting1

Table of ContentsINTRODUCTION..................................................................................................................2TASK 1............................................................................................................................................3P1 Evaluation and Analysis of needs of management accounting........................................3P2 Different methods used for management accounting reporting........................................5M1 Benefits of different management accounting system.....................................................6D1 Integration of systems and accounting in process of organization...................................7TASK 2............................................................................................................................................7P3 Analysis of techniques for development of income statement..........................................7M2 Applying a range of management accounting techniques...............................................9D2 Development of report and interpretation of data..........................................................10TASK 3..........................................................................................................................................10P4 Explanation of the advantages and disadvantages of the varied kinds of budgetary planning..............................................................................................................................................10M3 Analysis of the usage of varied planning tools and implementation for budget forecasting..............................................................................................................................................12D3 Evaluating the tools of planning for solution of financial problems..............................13TASK 4..........................................................................................................................................13P5 Compare the adoption of management accounting system to respond financial problems13M4 Responding financial problem through management accounting to bring success.......14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................162

INTRODUCTIONManagement accounting is considered as a significant process of analysing of data andrecording enteries of financial statements and reflects the reports which are used forunderstanding the growth and improvement of organization. Thus, management accounting isplays a key role within firm and therefore, it helps management of firm to make effectivedecision making through using information provided in accounts. Currently businesses aims totrack their performance and thus goes beyond cost based information of historic general ledgesystem provided by traditional financial accounting information (Christ and et.al., 2017).Through creating a good management accounting it helps in involving the responsibility tomanage wide variety of critical management accounting information through using managementaccounting system and management accounting techniques i.e. analysis of profitability throughvolume of cost, manufacturing cost absorption and charging cost of variables in order to makeeffective decision making. Further, management accounting is also prepared by the businesses in regard to keepmonthly or weekly reports of businesses regarding their financial performance. Hence,management accountant of any firm obtains the responsibility to follow all the rules andregulations as per the accounting standard so that they do not hinder the system. Carrying outmanagement accounting within business it helps in obtaining information related to business andthen take managerial decisions upon them (Deegan, 2013). Present study has been undertakenupon small business enterprise i.e. Unicorn Limited which is a small scale retailer. It employsless than 50 workers and also it has annual net turnover not exceeding Pound 500,000. Here,different tools are being used for carrying out management accounting reporting and thusadvantages and disadvantages of different planning tools which could be utilized for budgetarycontrol.TASK 1P1 Evaluation and Analysis of needs of management accounting It is the process of preparing and analysing the statements as well as reports related tofinancial information and thus later could be used by decision makers of firm. It provides usefuldata or information related to finance so that managers could use the same in regard to carry outregular short term decisions (DRURY, 2013). Management accounting is different concept than3

financial accounting in which managers generates monthly or weekly reports in relation toUnicorn Limited. Preparing such report by the management accountant involves the informationin relation to cash available, sales revenue generated, amount of order in hand, accounts payable,outstanding debts, inventory and raw material. Moreover, it also involves trend chart, varianceand other statistics. Also, it has been stated that financial and accounting of cost are consideredas the basis of management accounting. There are various kinds of systems of managementaccounting are mentioned below:Traditional method - Such method has been used by different accountants and thusconsidered as the traditional approach which is used by businesses. In order to carry outcalculation it involves direct cost, labour and overhead. Further, carrying out thetraditional cost accounting it involves cost driver which results in occurring of cost suchas direct material, labour and machine hours (Fullerton, Kennedy and Widener, 2013).Lean accounting- Further, it is another type of management accounting and thusconsidered as new concept which is generally being utilized for different alterationswhich are being made within accounting, controlling and carrying out differentmanagement procedure and thus measuring business carried out by Unicorn Ltd.However, accountant here requires focusing upon lean manufacturing and carrying outlean thinking to obtain better information and outcomes (Zimmerman and Yahya-Zadeh,2011).Throughput accounting- In such type of accounting it comprises determination ofconstraints in the system of production within firm. However, such concept is based uponthe principle and approach of simplified management system. Therefore, in regard toimprove profitability, Unicorn uses such system and also helps them to make effectivedecision making (Marginal and absorption costing. 2016).Transfer pricing- Further, it involves the price within movement of products or servicesis being done and thus helps Unicorn to calculate cost as well as expenses in transferringof products or services (Christ and et.al., 2017). Following are the different examples linked with management accounting system that aredescribed underneath-Cost accounting system- It is considered as the tool that helps in utilising the businesstowards making crucial estimation that involves cost of products in regard to identify the4

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