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Management Accounting Assignemnt : Nero ltd

   

Added on  2020-01-07

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MANAGEMENTACCOUNTING
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Table of ContentsINTRODUCTION...........................................................................................................................3SECTION 1......................................................................................................................................31. Importance of management accounting in improving performance of the company..............32. Explain different kinds of management accounting systems...................................................53. Evaluate the benefits of management accounting systems......................................................74. a) Preparation of income statement on absorption and marginal costing................................8b) Explain the differences in profit under two methods............................................................11c) Reconciliation statement of profit or loss..............................................................................11SECTION 2....................................................................................................................................12PART A.........................................................................................................................................12A budget is a forecast of what is expected to happen in future.................................................12Compare and contrast three planning tools in management accounting...................................13PART B..........................................................................................................................................13Compare effectiveness of management accounting systems in dealing with financial problemsCONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................152
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INTRODUCTIONThe role of accounting has increases with the increasing demands of the existing businessentity in relation to the external market. The higher complexities will enhance the accountingneeds to record all kinds of transactions in the business properly. The accountant will ensure thecost reduction by managing its existing financial resources. Nero ltd has been selected for thisproject report who is responsible for reducing the obligations of the management by nurturing itspresent skills and capabilities. This project report is all about defining various principles and theimportance of management accounting tools. The different tools are effectively explained inorder to apply in a business to gain competitive advantage. The higher preference is given to theabsorption and the marginal costing methods.SECTION 11. Importance of management accounting in improving performance of the companyNero Ltd has focuses on various aspects of their organization which will play an integralrole in improving the performance of the business entity. The business entity has emphasises ontwo major factors such as financial and non-financial matters of the organization which is givenbelow:3NERO LTDFinancial AspectsNon-FinancialAspectsCostFinancialRiskRevenueQualityTimeService
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Financial aspectsCost- The management accounting principles are used by an entity in order to improve theirexisting working conditions. The primary concern of management is to identify its costs inrelation to the sales and the revenue (Diánez-González and Camelo-Ordaz, 2016). Themanagement accounting will help in crafting cost reduction strategies to reduces cost which inturn increases revenue of Nero Ltd.Financial risk- ratio analysis is the tool of the management accounting which is used to assessthe financial performance of an entity. The future potential risks are identified by applyingvarious tools and techniques such as profitability, liquidity, efficiency and financial ratios byanalyzing its financial statements. This will help in internally audit of all the organizations toavoid the external threat imposed by the rivals.Revenue- Budgeting is the important tool used by an entity in order to forecast its future salesand the revenue in relation to the existing facts and figures in improving their existingperformance. The sales budget prepared in advance will help in generating future market trendsand further risks created in the same market.Non-financial aspectsQuality- The management accountant who are appointed to eliminate the existing costs incurredby the business entity in order to reduce its existing market obligations. The application of totalquality management will be beneficial for the business in identifying the areas in a businessrequire further improvement will be rectified in advance to remove the causes in present.Time- The timely delivery of goods and services will help the business to gain the trust andloyalty among the variety of customers (McLaughlin, 2016). The management accountingtechnique will be applied to reduce the time of business operations and its further delivery toseek customers loyalty. The automation techniques has applied which checks the supportingresources involved in the business operations in reducing its overall time.Service- The providing of various products or services is essential in order to maintain the brandimage in the eyes of several customers (Sami, 2016). The service can-be improved by focuses onthe errors and deficient areas of a business which are creating barriers in the delivery of goodamount of services. The management accountant will estimate the total costs incurred by thebusiness on all the areas which further help an entity owner to curtail unnecessary expenses.4
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