Financial Problem Solving through Management Accounting System : Report
Added on 2020-07-23
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MANAGEMENT ACCOUNTING
Table of ContentsINTRODUCTION ..........................................................................................................................1TASK 1............................................................................................................................................1P1. Meaning of management accounting and requirements of various kinds of management...1P2. Various approaches used for management accounting reporting ........................................3M1 Advantages of Management Accounting as well application .............................................4D1 Critical analysis of management reporting system ..............................................................5TASK 2............................................................................................................................................5P3 Cost Calculation for using appropriate tools of cost analysis ..............................................5M2 Various approaches of management accounting..................................................................6D2 Critical analysis of income statement....................................................................................7TASK 3............................................................................................................................................7P4 Advantages and disadvantages of various kind of planning methods used for budgetary....7M3 Use of different planning technique's...................................................................................9D3 Effective use of different technique's to decrease financial problems..................................9TASK 4..........................................................................................................................................10P5 Organisations are selecting management accounting systems to respond in financialproblems....................................................................................................................................10M4 Financial problems evaluation............................................................................................11CONCLUSION .............................................................................................................................11REFERENCES..............................................................................................................................12.......................................................................................................................................................13
INTRODUCTION Management accounting is a process of preparing report as well as accounts that givetimely or accurate statistical or financial information. It is needed by the managers in order tomake short term and day-to day decisions. MA (Management Accounting) report often considersorganisation’s details such as cash, sales revenue generation, account receivable and payable, etc.It is an activity of evaluating business operations and cost with regard to prepare internal records,financial report and accounts to help the employer in judgement making process in attainingfirm’s goals and objectives. The main aim of this report to know actual position of company andsolve financial problem through management accounting system.This report is based Airdri which is a UK based company and manufacture of hair-dryer.This project evaluates various methods of costing which can support them to identify negativeand positive outputs. This scenario explains the way in which firm is using budgeting activity tohandle their operating expenses and cash flows with other financial statements. In this research,various approaches of budgeting and their benefits and disadvantages are assessed as well. TASK 1P1. Meaning of management accounting and requirements of various kinds of managementMA refers to an activity of identifying, measuring, analysing, communicating andinterpreting financial information in order to attain goals and objectives of company. It is alsodefined as an activity of preparing reports and accounts that offers accurate or timely financialand statistical information in a systematic manner (Agbejule, 2011). It is required by the businessmanager in order to establish short-term judgements. These are prepared with regard to meetnecessities as well as requirements of administration. As per American Accounting Association(AAA), Managerial accounting are varying in applications of all resources. Each and everymethod is fashioned in order to give important information which is needed by manager. So, itwill support in making better judgements regarding to them. There are different types of MAsystems they consider like cost and job accounting system, inventory management and priceoptimisation, etc. Therefore, with the use of all methods, Airdri can maximise their profitability ratio andperformance in upcoming year. One of the main aims of using this approach is to make accurate1
information and resources utilisation. This are used by company manger in year. It is moreimpressive aspects because it analysis entire cost which is receive by firm in producing servicesor products. Management accounting is significant technique in planning activity as it will giveaccurate ways forms to invest in innovative venture (Bebbington and Thomson, 2013). Still,administration always tries in order to acquire more benefit from its minimum root by usingcorrect methods. In this activity, they see maximum capital in order to attaining targets and values that willbe managed as well as monitor with the utilization of various accounting method. MA support tomonitor costs & financial loss which obtain during Airdri production process. As an officer ofaccount, it is identify my role in order to use accurate approach. Mentioned company is a smallscale which is provide electronic items so they required and want a correct approach in regards torecord their regular basis transactions. Several systems of management accounting are:Inventory management method: This approach is observing and controlling the use,ordering and components storage etc. it is apply by the organisation in the goods production aswell as sell also. It is a pool of barcode scanners, mobile devices, desktop software and printerwith regard to streamline the IM such as goods, consumables, suppliers and stock, etc. It is alsodefined as a monitoring practice of quantities of the last products for sale. One of the main aimof this method is to correctly understand existence levels of inventory as well as under stocksituation and overstock. There are different function which are vary with this approach such asreceiving, generating buyers orders, adjusting, relocating of inventory. It is mainly linked withbusiness which deal in different units, in this best example is Airdri. LIFO: As per this method inventory purchased last is sold first so inventory cost underthis method will be the cost of earliest purchase. FIFO: In this method of stock valuation is a cost flow assumption that the first goodspurchased has sold first. As per this method, the earliest goods purchased are the first onesremoved from the inventory account. Cost accounting approach: It is also identified as a process of recording, collecting,evaluating and analysing various alternative courses of action (Burritt and et. al., 2011). Mainresponsibility of the method is to give necessary and important information to mangers in asystematic manner. This information is mainly based on the performance capabilities and cost2
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