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Report on Management Accounting and Types

   

Added on  2020-06-04

17 Pages5561 Words36 Views
MANAGEMENTACCOUNTING

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Management accounting and essential requirements of its different types..........................1P2 Various type of methods of management accounting reporting............................................4M1 Measurement the benefits of management accounting systems used in organisationalcontext.........................................................................................................................................5D1 Management accounting system and management accounting reporting.............................5TASK 2............................................................................................................................................6P3 Calculation of cost approaches to prepare income statement................................................6M2 Using the wide range of management accounting techniques..............................................8D2 Financial reports properly applied in organisation and interpret data of organisation..........8TASK 3............................................................................................................................................8P4 Advantages and disadvantages of different types of planning tools for budgetary control...8M3 Analysing the use various type planning tools and their application for preparing budget...................................................................................................................................................10D3 How planning tools helps to solve the financial problems..................................................10TASK 4..........................................................................................................................................11P5 Compare how organisations are adapting management accounting system........................11M4 how management accounting helps to managed financial problems to lead theorganisation...............................................................................................................................11CONCLUSION .............................................................................................................................12REFERENCES..............................................................................................................................13

INTRODUCTIONAccounting concept and methods have been mould as per the requirement and nature ofbusiness. Management accounting is a concept used to maintain discipline and ethical manner inoperations (Baldvinsdottir, Mitchell and Nørreklit, 2010). Phenomenon of management andaccounting has become modern and are implemented in organisations as per the nature of theiradministration and operation type. This report describes the meaning of management accountingand various types of its tools used by organisation. Integration of direction accounting systemand management accounting reporting are also defined in this context. Absorption and marginalcosting techniques are explained in respect of evaluating the profit. Different types of planningtools are defined subjected to make budgets and do strategic planning. Advantages anddisadvantages of planning tools are explained here as well. Importance of managementaccounting is defined in respect of resolving the issues and problems associated with financialplanning. It is tried to connect the financial problems with management accounting. TASK 1P1. Management accounting and essential requirements of its different typesAs per the definition given by IMA (Institute of Management Accountants), aprofessional manner of keeping records, transactions and tracking of financial information areconsidered as management accounting. The accounting system which remains essential inrespect of decision making, planning and performance management is considered in managementaccounting. The accounting procedure and system remain important form the management pointof view are known as managerial accounting. Management accounting system provides a path toachieve the core competence in task and helps to attain the desired goals in given deadline.A system which provides a medium and tools to operate the management and operationsto keep the accounting records, financial information and forecasting plans in a proper manner isalso considered as management accounting (Herzig, Viere, and Burritt, 2012). An effectivemanagement accounting system is the key to develop a strong organisational structure andsustainable growth. It helps the managers and accountants to prepare the financial statements andannual reports. These information are useful for the stake holders, shareholders, financialinstitutions, banks and owners of company.1

There are three types considered in managerial accounting which are commonly used inorganisation. Strategic management, performance and risk management are the branch ofmanagement accounting. To maintain the financial position of organisation at optimum level.There are various type of management accounting systems are used like: Cost accounting system: Cost accounting is one of the branches of managementaccounting which remains essential and important for manufacturing and production industries.This accounting system is also known as product costing system or system of accounting(Lambert and Sponem, 2012). Cost accounting system furnish a structure of analysing the cost ofthe product and determine the profit. It is also considered as profitability analysis and evaluatethe amount of stock. It become difficult to determine the cost of product and profitability, inthose organisation which remain align with multiple manufacturing process. Cost accountinghelps to execute the relevant data and bifurcate information which are useful to determine thecost of product and profitability.There are basically two major costing approaches divided in organisational context asprocess costing and job order costing.Job order costing: Organisation which operates multiple manufacturing and producingactivities are considered as separate jobs. This costing system bifurcates different thecosts of distinct types of products which are produced through various types of businessprocess.Process costing: This cost accounting system is used in large manufacturing andproduction firms. There are various types of processes remain associated in themanufacturing process. Requirement of material, labour and wages are incurredseparately in these processes. This costing system helps to determine the cost of productat every process. There is separate accounting records are maintained for these type ofmanufacturing processes. Hybrid cost accounting system: Combination of process costing and job costing isconsidered as hybrid cost accounting system. In this accounting system, there are certainelements used from both the accounting systems to evaluate the cost of product. Costallocation and annexation of overheads based upon activity based costing system andtraditional accounting system. 2

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