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Requirement of Management Accounting

   

Added on  2021-02-19

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ManagementAccounting

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Requirement of management accounting...............................................................................1P2 Methods are used for reporting..............................................................................................3TASK 2............................................................................................................................................5P3 Income statement by using marginal and absorption costing................................................5TASK 3............................................................................................................................................8P4 Advantage and disadvantage of planning tools.....................................................................8TASK 4..........................................................................................................................................13P5 Companies are using management accounting to respond to financial problem.................13CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16

INTRODUCTIONManagement accounting is related to financial reporting data and guidelines which givenby top auditor managers to make strategic decisions. Evaluating the data and making the rightchoices is critical for the business community (Saunila, Pekkola and Ukko, 2014). All financialinformation is gathered by accountant and used by administrators to analyse budgets andfinancial data to spread out company. The goal of management accounting to making decisions,managing business processes and control activities. Effective management accounting consist ofobligations to arrange a broad range of of critical management accounting information utilise formanagement accounting system and management accounting techniques. To understand theimportance of report Home Furniture Ltd has been selected. This company apply managementaccounting to analysis financial information and take appropriate decision. This report will coverseveral topics management accounting system, reports and planning tools applied by thecompany to control the financial activities. Additionally, apply management tool to controlfinancial problem with the help of system, calculate overall cost and provide solution of problem.TASK 1P1 Requirement of management accountingAccounting management is linked to an organisation that can be applied by accountantsand administrators to analyse information in order to make strategic decisions. The businessmanager makes and executes investment plans via the management of transactions to reducecosts and maximise profit. All financial data are related to the information system and a companyis reported and managed. For example, Home Furniture Ltd managers use accounting forbusiness practices to make judgement and accomplish business goals. It present differentfunctions like supply data, rectify data, interpretation, facilitated accounts control, qualitative andquantitative information. There are defined some function of Home furniture Ltd such as: Presentation of data: To present financial information of the company in front ofdirectors and outsider people, prepare income statement, balance sheet, cash flow. On the basisof these statement company take appropriate decision (Pace, 2014). Thus, Home Furniture Ltdrequired to prepare all the statements to effectively present data which is essential to make rightaction. 1

Rectifies data: The financial information of the company modified according tomanagement expectations. Such as, director of Home Furniture Ltd rectified informationaccording to month wise, territory wise and product wise. Predicting: It is most important factor of management accounting which is utilised bymost of the organisation for further investment. It supports to predict the accomplishments ofobjective for short and long term. For instance accountant of Home Furniture supply appropriateinformation as well as data for the reason of predicting. Management accounting system: It is part of internal system that is utilised by companyto measure and analysis its procedures for a reason of arranging business activities. Differentsystems are important to assist decision, control business and arranging the finance. Such as,Home furniture is applying this system to take appropriate decision, arranging activity of profitand investment (Green and et. al., 2014). Cost accounting system: The particular system is a framework which is used by theorganisation to estimate the cost of products in order to evaluate profitability, stock valuation andcontrol cost. According to situation an organisation utilise a combination of both job ordercosting and process costing. In this system cost allotment is based on the traditional costing andactivity based costing. Financial accounting system: It is defined as accounting system that is utilized by theaccountant to maintain financial data in systematic way. This system present financialinformation in front of externals of organisation such as suppliers, creditors and many others. Itis following all the rules and standards, internal control, accounting and auditing informationsystem to arrange financial data. Mostly organisation follow this system in order to takeappropriate financial decision. Such as, home furniture to prepare financial statement followingall the rules & regulations, accounting information system and auditing rules that supports torecord financial information adequately and according to that appropriate decision. Tax Accounting: It can be defined as a management accounting system which supportsfor subtracting tax numbers to acquire precise income. In simple terms, it is a set structure ofaccounting method that not only concentrate on tax activity but also presenting public financialstatements. The amount of tax charge according to government policies which set for individual,corporation, partnership, international tax etc. to calculate actual revenue (Nam and et. al., 2014).The income tax return fill by the advocate and charter accountant. Such as, Home furniture2

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