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Types of Management Accounting Systems: Doc

   

Added on  2021-02-19

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Management accounting
Types of Management Accounting Systems: Doc_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3LO1..................................................................................................................................................3P.1 Management accounting and essential requirements of types of management accountingsystem.....................................................................................................................................3P2. Different methods used for management accounting reporting.......................................4LO2..................................................................................................................................................6P3 Preparing income statement using absorption and marginal costing system....................6LO 3...............................................................................................................................................13P4 Advantages and disadvantages of different planning tools.............................................13Application of planning tools and their uses in the business................................................14P 5 Comparing use of different management accounting systems by different organisations soas to responding financial problem.......................................................................................14CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................18
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INTRODUCTION Management accounting is used to provide the information to the managers for thedecision-making process, planning and organizing the activities in the organization. NISA is aretail industry which provide various product and services to their customer like the groceryitems, food items etc. The report highlights the various management accounting system and theiruses in the organization. It explains the various methods used for the management accountingreports and the use of marginal and absorption cost in the accounting system. It also highlightsthe advantages and disadvantages of planning tools in budgetary control and the comparison ofuse of management accounting system in solving the financial problems of the organization andimprove the quality of the firm.LO1 P.1 Management accounting and essential requirements of types of management accountingsystem.Management accounting use the provision of accounting informations in order to betterinform themselves before they decide matter within their organization. Management accountingis a managerial accounting that use by managers in Nisa organization and then make decision forlong term and short term. Following are function of management accounting:- Provide data: - It is an important function of management accounting because itprovides data in statistical manner through income statement, cash flow and balance sheet. Thisall data are evaluated by managers and make decision for long term and short term.Analysis and interpretation :- engagement accounting analyse the data and present itbefore the management in non-technical manner along with his comment and suggestion. Soowners and top personnel's in the management understand and make decision.Types of management accounting system:- Financial accounting system: - this system of accounting is keep books and records ofdouble entry books and all transaction recorded summarized and presented in financial report.This accounting system, follow all rules and standards of accounting, at the time of auditing,balance sheet and income statement use by auditor. It also provides financial information tooutsiders. For example :- balance sheet and cash flow statement.
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Cost accounting system: - Cost accounting system is used by manufacturers to recordproduction cost and capture all cost that incur in production process (Otley, 2016). So thismethod helps to Nisa in determine cost of production at every stage of manufacturing (Maas,Schaltegger and Crutzen, 2016). Activity based costing also include in this system and throughthis, management calculate cost according to activity. Fixed and variable cost includes in thissystem. Example :- fixed cost, variable cost etcManagement accounting system :- this accounting system provides relevantinformations to managers, and they make policies, plan and strategies for running businesseffectively. Managers of Nisa prepare managerial accounts and then take decision on the basis ofthis accounting system. Organization has need to this system for manage and control internalmanagement.Tax accounting: -tax accounting majorly focus on tax returns, payments and preparepublic financial statement. This accounting system use by individual, partnership firm,corporations. Due to this accounting system organization fill return and give corporate tax onprofit of organization. Goods and service tax pay by organization on their production and sells ofgoods and services.P2. Different methods used for management accounting reporting.Managerial accounting report use by small business managers and owners that theymonitor to Nisa's performance. Many types of report prepare by management of organization likebudget report, job cost, inventory etc. Trading account: - It is a financial statement and includes all investment, securities andcash related transaction. This account is useful for trader because through this it maintains andkeep their transactions (Chenhall and Moers, 2015).It main purpose is hold cash for financialgoal. Investors invest their money in stock, share etc.Profit and loss account: - It is a financial statement that includes all revenues, cost andexpenses of organization. It uses by organization to analyse performance of Nisa. Organizationalso make decision about payment and dividend through this account. Cost of good sold: - Cost of good sold refers too attributable to the production of goodsold in organization. That means it includes all cost of materials used in creating good along withlobar cost used in produce to good. This statement use by organization to evaluate selling cost offinished good.
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