Benefits and drawbacks of budgetary control planning tools

MANAGEMENT
ACCOUNTING

Contents
INTRODUCTION...........................................................................................................................................3
TASK 1..........................................................................................................................................................3
P1 MAS and their application ..................................................................................................................3
P2 Different ways of MA reports. ............................................................................................................5
D1 Correlation between MAS and MA reports........................................................................................7
TASK 2..........................................................................................................................................................7
P3 Preparation of income statements. ...................................................................................................7
M2 Techniques to prepare income statements. ...................................................................................11
D2 Interpretation of produced income statement................................................................................11
TASK 3........................................................................................................................................................12
P4. Benefits and drawbacks of different types of planning tools used for budgetary control..............12
M3 Role of planning tools......................................................................................................................14
TASK 4........................................................................................................................................................14
P5 Importance of MAS to solve issues...................................................................................................14
M4 MA to respond financial problems..................................................................................................16
D3 Role of planning tools to solve financial issues.................................................................................17
CONCLUSION.............................................................................................................................................17
REFERENCES..............................................................................................................................................18

INTRODUCTION
MA is described as an accounting system that allows a business to operate more effectively.
This can be defined as the implementation of accounting methods to find out need of monetary
data for better management. It concentrates on aspects of accounting (Bromwichand Scapens,
2016). Under this accounting both financial and non financial information is used in order to
produce internal reports that lead to better decisions. The collected information is used by
managers to determine systematically. MA is a system mechanism that offers the details
necessary for various levels of management. The report is based on company that is Grant
Thornton, headquartered in United Kingdom. This company is one of the main accounting firms
which provide its services to its clients. Creams limited are a client company of above
accounting firm. This company sells ice cream, doughnuts. The project report covers detailed
information about various accounting systems and reports as well as different range of planning
tools are also mentioned. The further part of report demonstrates about role of MA in solving
financial issues.
TASK 1
P1 MAS and their application
MA is also considered as managerial accounting and is characterized as a judgment creating
process for providing monetary data to administrators. MA is generally utilized for the
accounting department of the company, since that is mainly the different from financial
accounting concepts (McLaren, Appleyard,and Mitchell, 2016). Through this process financial
information and tax forms are shared through a financial division with the management
personnel of the company. This background knowledge is used to take better as well as for more
accurate decisions, track the organization performance, business trends etc. It includes various
kinds of accounting systems like:
 Inventory Management System- The system for stock management is a tool for better
stock regulation through the organization’s supply chain. In Creams limited the whole
distribution cycle from placing orders to suppliers is constrained by this method and it
enables the whole path of in a systematic manner (Aria and Rahadjeng, 2018). Through
using the inventory control method, sales firms, retailers, manufacturers and vendors can

make their stores effective by taking correct decisions for stock purchasing. The system
involves vital range of methods such as LIFO, FIFO and Average Costs. It is essential for
companies to take corrective actions for management of stored inventories. Below
description of these methods is done:
LIFO (Last in first out) - It is a type of method in which stock that comes last is used
first for production.
FIFO (First in first out) - This method is different from previous method, as under it
stock that comes first in store is used for production.
Essential requirement- This accounting system is required in Creams limited for
effective management of stored level of inventories. As they offer different types of
bakery products and by help of this accounting system, manager gets aware about how
much products are remained unsold at the end of month.
 Cost accounting system- It is a form of management accounting method that
encompasses a large wide range of operations as well as financial factors. In order to
hold cost under estimate, it is important for companies (Fleischman and Parker, 2017).
This accounting is used, as in the aspect of the above company, to maintain production
expenses below the expected cost. The main objective of this is to focus on keeping cost
of various operations lower as much as possible. Without it, this can possible to keep
their cost lower from estimated value of cost. It is not associated to specific company as
it can be applied in any business whether it is financial and non financial.
Essential requirement- It is required in Creams limited to find out cost of each activity.
The finance manager of company uses cost accounting system to identify costs in their
products of waffles and chocolate doughnuts separately.
 Price optimization system- It is a method which includes a particular way of setting
pricing and service requirements for the customer. This accounting method helps
businesses to gain useful market patterns and data on consumer requests. Basically, this
collected information is used by businesses to take suitable actions for setting of prices
of their products. In the sense of the above mentioned chosen company their selling