Sample Assignment on Management Accounting
Added on 2020-10-22
14 Pages3891 Words278 Views
MANAGEMENTACCOUNTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1P1 Explaining management accounting and essential requirements of types of systems...........1P2 Explaining methods and techniques for management accounting reporting.........................2M1 Evaluating benefits of systems with organizational context................................................4P4 Explaining advantages and disadvantages of types of planning tools on basis of budgetarycontrol.........................................................................................................................................5M3 Analysing use of planning tools and application to forecast and prepare budgets...............7P5 Evaluating how business are adapting accounting system for responding financialproblems......................................................................................................................................8M4 Analysing that while responding financial problems, management accounting leadbusiness for sustainable success..................................................................................................9CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................11
INTRODUCTIONManagement accounting is known as process to determine, analyse, tracing and reflectingfinancial information which could be used internally through manager for purpose of planning,decision making, planning and operational control. The present report will demonstrateunderstanding of management accounting with their essential requirements and types. Similarly,this would explain different methods of managerial accounting reports along with advantagesand disadvantages of planning tools with context to budgetary control. In the same series, therewill be analysis of these planning tools with application to forecast and prepare budgets. Thisreport would compare ways where organization could imply management accounting forresponding the financial issues. On basis of this report, each aspect would be described byconsidering Sollatek (UK) as its line of business includes manufacturing of miscellaneousfabricated products as comprised in industrial sector of manufactured goods.P1 Explaining management accounting and essential requirements of types of systemsAs per CIMA, management accounting is known as process of measurement,identification, analysis, accumulation, preparation, communication and interpretation ofinformation used through management for planning, controlling and evaluating within businessand assuring appropriate application of accountability with context to resources (Cooper,Ezzamel and Qu, 2017). The functions of management accounting with context to Sollatek (UK)is formulation of financial strategies with application of sales forecast, job costing techniques,budgets within managerial accounting tools. This would lead to elaborate financial consequencesof decisions as if senior leaders adjust capital structure of company, then with this helpramifications related to financing of debt or equity.Simultaneously it helps in monitoring expenses as with formation of static, flexible orrolling budget with various other types, helps leader and head of the department for monitoringexpenses. The major function is to maintain profitability as there is presence of various tools forkeeping business profitable along with performing break even analysis.Financial accounting lays special emphasis to prepare information with context toexternal parties like public regulators, stakeholders and lenders. However, Managementaccounting considers financial information of company along with developing reports forconfidential and internal use through managers for decision making and determining methods torun company in efficient aspect. 1
Significance of management accounting to integrate with organizations such as Sollatek(UK) is stated below:This leads to measure actual performance comparatively with budgets.The activities of business are better managed through application both planning andbudgeting.This helps management in such aspect that latter could maximise rate of return on capitalemployed.The businesses efficiency is increased and improves relation among labour andmanagement as well.The types of management accounting system are detailed below:Cost accounting system: It is replicated as type of accounting system which evaluatedthat how organization is doing and offers help to managers make decision on basis of costto do business. This approach is applicable to each kind of business as it trading ormanufacture products or delivering services. In simple words, this system is used throughmanufacturers for tracing activities of production with application of perpetual inventorysystem (Nitzl, 2018). This accounting system is framed especially for manufacturerswhich traces inventory flow on continual aspect via different production stages.Job Costing system: This system is distinctive method costing as form of particular ordercosting which is directly adopted for executing work strictly as per specification ofcustomer. The process of production is highly dependent on number of orders receivedthrough customers as production is not intermittent and standardised in nature. In simplewords, it is process to assign cost which incur a particular job to individual of businessinvolved with. It is referred as cost allocation to company's construction projects as it isbroadly used in construction industry.P2 Explaining methods and techniques for management accounting reportingManagerial accounting implies accounts for planning and budgeting objective to measurecompany's performance. In this aspect, it considers creation of capital budget which statesinvestments and expenses that might undertake in the future. Similarly, other concept isprojected decision making as managers uses managerial accounting reports like accountsreceivable ageing report for tracing benefits of underlying receivables with their time duration. Ithelps for long term decision making for multiple companies. Moreover, performance2
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