Managing Accounting: Styles, Merits, and Demerits

This document explores the concept of managing accounting, including various styles of management, their merits, and demerits. It also discusses the critical link between budgeting and short-term decision making. Additionally, it evaluates the implications of participatory budgeting on business performance.

MANAGEMENT
ACCOUNTING

INTRODUCTION.........................................................................................................................3
MAIN BODY..................................................................................................................................3
Critically asses of various style of managing accounting with their merits and demerits...........3
Identify critical link between budgeting and short-term decision making..................................6
Evaluate merits and demerits of participatory budgeting with its implication on business
performance.................................................................................................................................7
CONCLUSION..............................................................................................................................8
REFRENCES.................................................................................................................................9

INTRODUCTION
Managing accounting is the process by which an organization is able to maintain its
accounting. In management accounting or managerial accounting, managers use the provisions
of accounting information in order to better inform themselves before they decide matters within
their organizations, which aids their management and performance of control functions. Scope of
managing accounting is wider in nature because it deals with information regarding accounting.
Nature is very dynamic because it impacts decision making of an organization. In this essay
things that is going to be covered is based on managing accounting. In this essay benefits and
demerits is to be explained over various styles of accounting. Also link between short-term
decisions makings. In the end participatory budgeting and its implication on business
performance is covered.
MAIN BODY
Critically asses of various style of managing accounting with their merits and
demerits
Management in accounting is that kind of process which is helpful in making an
organization keep data over the expenditure that is being made by an organization in order to
complete project or task that has been accomplished or is about to accomplish. Various kinds of
management accounting system exists to help an organization manage its accounts. Accounting
system are inventory, cost accounting, price optimization and job accounting system with lot of
accounting objectives, elements and functions. Further accounting system has been explained as
follows in detail and basic element involved in it helps in making standardization context in
order to aim for data that has been analyzed, identified and communicated (Pelz, 2019).
Cost accounting system or costing system is the framework applied by the corporation
to approximate the cost of its products for inventory valuation, profitability analysis, and cost
control. In the cost accounting system allocation of cost is performed based on either activity-
based costing system or traditional costing system. Approximating the actual products’ cost is
crucial for effective functions.
Advantages of it has been given as follows
Elimination of Wastes, Losses and Inefficiencies this means that a good accounting system
always focuses upon reduction of wastage, loss and inefficiencies through fixing standards for
everything.

Cost Reduction under this advantage new and improved methods of production are followed
under cost accounting system. It makes reduction in cost possible with proper balance.
Identify the reasons for Profit or Loss in it good cost accounting system is been helping in
highlighting increase and decrease of profit. Also if management is able to take remedial actions
profitability is been concerned being concerned. This makes management to deal with monetary
problems related to product or process.
Disadvantages of this system are
 All depends upon past performance that is available over the costing and records but
decisions are only taken by management in future.
 Cost of previous year is not same as that of present year. That is why cost data is not
useful.
 Cost keeps on fluctuating from time to time for utilizing it in full capacity.
Inventory management this is the method in which overseeing has been ordering over the
storage of components that is applied over production is being managed under such kind of
management. Also in this system various components that is being applied which helps in
focusing over storage of components under which corporation production is being applied. As
per this system money spend on various kinds of resources that is barcode making, technology,
mobile are being used within the project (Messner, 2016). The money spend over this is being
handled under such management. In this quality of finish good are maintained in decent rate of
spending fund.
Advantages of this are as follows:
 Saving of money while protecting of budget is going to be done.
 Purchasing of items inly when required is being managed under this accounting system.
 Lao positivity is maintained over the invest and inventory is managed as per the desired
level through calculating the maximum amount to be spent on them.
Disadvantages of this is been given as follows:
 At times orders are being placed at irregular intervals that is really hard to manage and
also suppliers with producer faces inconvenience in material supply.
 Due to risk of reordering a material. It cannot be ordered in group.
 In case of high demand of product there is always going to be shortage or pending of
delivering order within required time or punctuality is going to be disturbed of delivering
order.
Job costing system is regarded as that kind of service which is related to manufacturing
costs that is going to be spend over individual product and its manufacturing that is related to
product made in an organization. This management is applied over those kinds of process in

which difference is there. It helps in accumulation of data and cost over service is also in
production of job.
Advantages of this system has been explained as follows:
1. The cost can be varied from process to process of job accomplishment. It provides scope over
cost controlling with steps required to be taken.
2. Profit earning is been gained in separate manner in form of job costing.
3. Over job compilation every element related to cost or selling price is being compared with
estimation of cost control. This makes reduction in profit at each job through job costing.
Disadvantages of this system is as follows:
1. There is no standardization of job in job costing. Hence, there is a need of close supervision.
2. More clerical work is required for maintaining detailed information in job costing.
3. Job costing is expensive.
Price optimization systems is being referred to as the application which is based on
mathematical analysis to an organization. This makes realize over the reaction of consumer
through goods and services includes different channel. Also it is applied to determining the
prices which a company determines shall best fulfill their goals like maximizing the operating
profit (Maas, Schaltegger and Crutzen, 2016).
Advantages of it has been explained as follows :
 In a free price system, the forces of supply and demand determine prices.
 The most efficient use of resources is when supply matches demand. Supply and demand
are equal when the market determines the price at which a number of goods supplied
equals a number of goods demanded.
 The price system also allows us to buy many products. Manufacturers are willing to make
products when they can make money.
 When supply equals demand, businesses are maximizing the profit potential at the given
price level.
Disadvantages has been explained as follows:
 One disadvantage of the price system is that for certain products, the costs of setting up
the industry are so high, there is only one seller of the product.
 In cases like these, such as with the electric and the natural gas companies, or with the
water companies, without government regulation, prices could be very expensive since
they are the only provider of the product.
 In these cases, the government needs to regulate these industries because the price system
would lead to very high prices for water, electricity, and natural gas.
 The setup costs for these industries are so high, there is no competition for these
companies.

 This could cause consumers to make some very difficult choices if the prices are
regulated by the government
Identify critical link between budgeting and short-term decision making
Budgeting is considered to be a crucial ingredient in order to make a business gain
success and popularity. This makes business more uplifted in terms of profit and helps it gain
sustainability over a particular time period. It is done by individual team which has been
dependent over the size and character of an organization. Also forecasting funds, prioritizing
projects and money through various sources of budgeting is done which makes a successful
business plan possible.
Available Funds
Very first thing that is required to be kept in mind while making budget is that
management team should have brighter and wider thinking. It leads towards developing of
budget but before forming budget and analysis is required to be done over present market
condition and standards of business. This is going to give an idea over day to day operations
that is being performed within an organization to make plans related to expansion with growth.
Determining available funds helps in taking into accounting of where all of your resources are
currently being used. Some resources may be tied up in necessary expenditures, while others
might be free or negotiable for use in new developments (Johnstone, 2018).
Projects
The real goal of budgeting is to develop short- and long-term plans. No business
intends to stagnate. By carefully assessing your current standing, you have the tools to look
into your future plans. Budgeting helps an organization and its team to seek what kinds of
expansion would be realistic. In other cases, budgeting might reveal areas of wasteful spending
that are reduced over moving forward through long term projects. Budgeting is beneficial
because of the value that is hold by it in a project within limit of it. It makes business set new
and better goalas in future.
Operational
The heartbeat of a business is its day-to-day operational expenses. You might want to
expand into another country or open a new store, but if you’re having trouble paying your
staff, that is out of the question. Budgeting can help you section off funds for daily expenses so
that your business can stay afloat during rough times (Hutaibat and Alhatabat, 2019). Budgeting
will also help you find the cheapest way to finance your day-to-day business. For example,
there is no reason to get tied up in loans and interest to meet basic expenses if you are able to
pay for them, interest free, out of your earnings. Budgeting allows you to streamline your
business and eliminate roadblocks to growth
Funding

Cash flow can be a big problem for many businesses, to such an extent that it might
cause failures for businesses that are doing everything else right. Every business needs to have
ways of financing both regular expenses and expansionary projects. Theoretically, businesses
take out loans for new projects and expansions on the assumption that bigger operations will
pay back the loans and then some. Budgeting is crucial here, because it will help to find the
best ways of fund a project. There is no reason to go bankrupt because timeline for paying back
a loan is a bit off or because project is more costly than anticipated.
Evaluate merits and demerits of participatory budgeting with its implication on
business performance
Participatory budgeting is a process of democratic deliberation and decision-making, in which
ordinary people decide how to allocate part of a municipal or public budget. This makes
magnitude of such budgeting to be dependent over the municipal, regional, or provincial level.
(Dekker, 2016). It allows over exchange of information between management and subordinates
which has been showing efficiency on resources and supports allocation of resources. Adopting
of accurate and realistic budget helps in motivating employees and making them clear about
goals with objectives to be achieved. This increases there confidence which makes budget and
various procedures easy. That is how business organization and there business is implicated over
business performance.
Merits and demerits of such kind of business is been explained as follows:
Merits
 Coordinates activities across departments.
 Budgets translate strategic plans into action.
Demerits
 The major problem occurs when budgets are applied mechanically and rigidly.
 Budgets can demotivate employees because of lack of participation. If the budgets are arbitrarily
imposed top down, employees will not understand the reason for budgeted expenditures, and will
not be committed to them.
CONCLUSION
From the above file the concept of managing accounting is been explained that means
managing the accounts. Various styles of such management is been explained with merits and
demerits. Further decision making and budgeting is been explained with their relations with each
other. In the end participatory budgeting with its merits and demerits is being covered.

REFRENCES
Books and journals
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Systematic review of a paradox. International Journal of Management Reviews. 21(2).
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Tan, H.C., 2019. Using a structured collaborative learning approach in a case-based management
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