Management Accounting: Tools for Budgetary Control and Financial Problem Management

Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK-..............................................................................................................................................1
P4:-Benefits and drawbacks of several types of tools used for budgetary control.....................1
P5:- Specify how organisations are conforming accounting system to manage financial
problems......................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES ...............................................................................................................................5

INTRODUCTION
Budgetary control is the process of controlling and monitoring the budgets maintained by
comparing actual and standard performance. Budgetary planning is a term used to prepare a
budget and utilising the same for reduce the risk of an enterprise. Co-ordination and
maximisation of profit is gained through proper planning of budget. By finding out
deviations,firm can take remedial measures to correct the actual performance. This report will
contain advantages and disadvantages of different planning tools used for controlling budget in
P4 and comparison of distinct accounting systems needed to tackle various financial problems in
P5.
TASK
P4:-Benefits and drawbacks of several types of tools used for budgetary control
Budgetary control is a technique through which actual outcomes are compared with
predefined budgets. Differences in the performance which is known as variances are allotted to
various responsibility centres which either take corrective actions or modify the actual
budget(Englund and Gerdin, 2018). There are various planning tools used for budgetary control
can be explained as given below-
1. Variance analysis-Every department is required to maintain budget and while comparing
actual and standard performance deviation are to be find out. Variances can be further
classified as favourable or unfavourable.
Advantages of variance analysis-
 By adopting variance approach an organisation can easily identify risk and work in a
proactive manner which distinguish it from its competitors.
Disadvantage of variance-
 It is a complex process because it requires a lot of activities to be performed such as
inspecting variance and taking measures to correct it. There is lot of cost incurred to
conduct the tasks of this planning tool.
2. Adjustment of funds-It is a planning tool used in proper allocation of funds from one
project to another project. This techniques is commonly used by top level
managers(Hanrahan and et.al., 2018).
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