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PART B6 ACTIVITY 1 1 Types of management accounting system

   

Added on  2020-12-09

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Management Accounting
PART B6 ACTIVITY 1 1 Types of management accounting system_1
Table of ContentsINTRODUCTION...........................................................................................................................1ACTIVITY 1....................................................................................................................................1PART A.......................................................................................................................................1Types of management accounting system ..................................................................................2Management Accounting Reports...............................................................................................4Benefits of management accounting system and their application.............................................4Management accounting system and management accounting reporting is integrated withinorganisational processes..............................................................................................................5PART B.......................................................................................................................................6Annex (A)....................................................................................................................................6Annex (B)....................................................................................................................................6ACTIVITY 2....................................................................................................................................8Part A:..............................................................................................................................................8Advantages and disadvantages of different types of planning tools...........................................8Use of different planning tools and their application for preparing and forecasting budget......8Part B:..............................................................................................................................................9A comparison of how organisations are adapting management accounting systems to respondto financial problems...................................................................................................................9An analysis of how in responding to financial problems, management accounting can leadorganisation to sustainable success.............................................................................................9An evaluation of how planning tools for accounting help to solve problems and supportorganisations with sustainable success........................................................................................9CONCLUSION..............................................................................................................................10.......................................................................................................................................................10REFERENCES..............................................................................................................................11
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INTRODUCTIONManagement accounting system is considered as main function of an organisation thatgives internal information of business. It includes ability of organisation for providing aparticular commodity, liquidity, capability to meet obligation, financial flexibility of businessand more. The availability of internal information aid company's managers in planning andallocating scare resources in efficient and effective manner. On the basis of internal informationof business, a company can make appropriate decisions of business related to future growth andsuccess (Neubauer, H. and et. al, 2012). The present report is focusing on this concept ofmanagement accounting system and how it helps an organisation in monitoring the performanceof business. For this purpose, a reputed engineering company of UK is taken, named by SevernTrent. It is one of the top ten largest regulated water and sewerage company, that headquarteredin England. To streamline the business and develop a single worldwide image, its line managerhas adopted various techniques of management accounting for promoting an understandingamong its various department. This assignment is divided into two main activities where first part reveals theexplanation of management accounting, including its different types. In addition to this, it alsoshows importance of integration of this concept within organisational processes. On the otherhand, second activity gives an explanation on advantage and disadvantage of different types ofplanning tools for budgetary control. ACTIVITY 1PART AManagement Accounting Management accounting is also known as cost or managerial accounting that defines aprocess of analysing cost and different operations of business, for preparing internal financialrecord, report and accounts (Gates, Nicolas and Walker, 2012). This concept also refers an act ofmaking sense of costing data and translating the same into useful information for monitoring theperformance of business. It generally handles a number of facets of accounting like margins,capital budgeting, valuation and product costing. In context with Severn Trent, it is one of thetop most engineering company of UK, that supplies water from Bristol Channel to Humber tomore than 8 million people every day. Through understanding the concept of management1
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accounting, its line managers can make effective decisions for supplying water smoothly andenhancing performance of business. Management Accounting System: This system can be defined as internal process of organisation that describes company'sdetails about financial growth, ability to meet obligations and more. It collates the majorinformation of business like cash-flow, revenue, outstanding debts etc. for making timely trendstatistical data (Fourie and et. al., 2015). This system also combines both financial and non-financial data for estimating the success of business in a particular accounting period. Thus,through management accounting system managers of Severn Trent can make proper decisionsfor allocating scare resource in efficient manner. Along with this, as this system is an automatedsystem therefore, it aid managers of respective company to make proper management decisionsand use internal information of business in a convenient way. Types of management accounting system In order to monitor performance of business and identify relevant information, managersof Severn Trent can use various types of management accounting system (Faÿ, Introna andPuyou, 2010). It includes inventory management, price optimisation, inventory management, jobcosting and cost-accounting system etc. Inventory management system refers to the management of stock and inventories of abusiness. It tracks goods through entire supply chain process which includes different aspectslike controlling and managing stock levels, reordering quantities, buffer stock and more. Thus,this system covers overall processes that start from production to retail, warehouse to shippingand more (Dosch and Wilson, 2010). As complexity of business within engineering and otherfield is increasing day by day. Therefore, it becomes essential for companies like Severn Trent tointroduce inventory management software within business. This would help in maintaining ahealthy warehouse and monitor entire performance of business as well. Since present companysupplies water to millions of home on daily basis. Therefore, optimising inventory aid inavoiding wastages and providing visibility to supply-chain process. Along with this, trackingrecords of products also aid in predicting how much sell is necessary in future for enhancingprofitability. Cost accounting system refers to a framework that provides a company an estimatedcost of its products for inventory valuation, controlling cost and profitable analysis. For this2
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