Management Accounting Systems- Doc
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Added on 2020-10-23
Management Accounting Systems- Doc
Added on 2020-10-23
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Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1LO1. Management accounting systems...........................................................................................1definition of management accounting and essential requirements of different managementaccounting systems.................................................................................................................1methods of management accounting reporting.......................................................................2Benefits and applications of management accounting system in an organisation..................3LO2..................................................................................................................................................5Preparing profitability statements using marginal and absorption costing method...............5Critical evaluation of how management accounting systems and management accountingreporting is integrated with organizational process................................................................8LO3..................................................................................................................................................8Advantages and disadvantages of different types of planning tool used for budgetary control.................................................................................................................................................8Application of different planning tools for preparing and forecasting budget.....................11Evaluation and adaption of management accounting system in respond to financial problems...............................................................................................................................................12How management accounting can lead organization to sustainable success.......................14How planning tools helps in solving financial problem and lead to organization sustainablesuccess,.................................................................................................................................14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONManagement accounting is concerned with the presentation of professional knowledge andabilities to reveal accounting in policy formation, planning and control for the undertakings. Thepresent study is based on TSR pvt Ltd and further explains the requirements of managementaccounting. The budgeting tools and techniques, their uses and applications.LO1. Management accounting systemsdefinition of management accounting and essential requirements of different managementaccounting systemsManagement accounting is the branch of accounting and is prepared on the basis of theaccounting information so that effective strategies and policies can be formulated by themanagers that helps in the functioning of the day-to-day operations of the organisation. It assistsin planning, organising, directing and commanding the work of the company. It also enables theTSR pvt. Ltd in focusing on three different areas that includes performance management,strategic management and risk management.There are various management accounting systems that plays an important role in maintainingthe management accounting optimally.Inventory management system- TSR pvt. Ltd make use of inventory management system asthe management accounting tool that helps in attaining the optimum utilisation of resources. Itenables the firm in taking the decisions regarding the purchasing of raw material, and keepingthe record of the handling cost. It is a software that is adopted for controlling the investment inthe inventory. Cost accounting system- It is a system used by the company in recording the manufacturingactivities using a perpetual inventory system which continuously updates records for costs ofmaterials, goods in process and finished goods inventories. It also provides information about themanufacturing costs per unit of product.Job costing approach- It is essential for the TSR pvt. Ltd to assign and accumulate themanufacturing cost of the each product so that an activity in the premises can be identified. Thetask and the job for which the cost are collected comes under the purview of this identifiableactivity. Contract costing is the type of job costing in which a contract constitutes a unit of cost.1
Optimisation system- it enables the business in choosing the cost effective approach so that theproduct can be produced with no wastage or less wastage and with low cost. A mathematicalanalysis is done regarding the price and the demand of the product. A particular price is set atdifferent levels to obtain the best price that increase the profits and the demands of the customersare known so that product is prepared as per the customer specification and a large customer basecould be achieved.methods of management accounting reportingVarious methods of management accounting reporting that facilitate the information regardingthe budget, accounts receivables, cost accounting and the performance of the operations of thebusiness. The methods are as follows-Budget report- TSR pvt Ltd prepares this report in measuring the overall performance of thecompany. It is made on the basis of previous experiences that the organisation has faced. Anefficient budget is one that is framed to meet the uncertain events in the future. It is useful indetermining the incomes and expenses of the company so that expenditure can be controlled andthe profits can be increased. Performance reports- This report is created to review the performance of the company so that ifthere any gap exist then corrective measures can be taken by the TSR pvt Ltd so that goals canbe achieved on time. Managers make use of this report to frame the effective strategies so thatforecast can be done in efficient manner. It also helps in getting the information that the task areperformed as per the set target so that perfection can be met.Account receivable ageing reports- As the business highly relies on the credit so this reportplays a vital role in knowing the payment need to be made and the time period within which theyare to be paid. It helps in identifying the information about the defaulters and the collectionprocess of the company. In TSR pvt Ltd if there are large number of defaulters then company hasto take corrective steps in relation to tightening the credit policies. It assists in maintaining thecash flow efficiently as it is essential for keeping the sound cash position.Cost managerial accounting reports- It helps in computing the manufacturing cost and the costof other articles in the business. It facilitates the managers in ascertaining the realizable cost in2
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