Management Accounting: Planning Tools, Use of Systems, and Financial Problems

Management Accounting

 Introduction
 Planning tools of management accounting
 Use of management accounting systems by organizations
 Conclusion
 References
Table of contents

 Different types of planning tools can be used in management accounting by the
organizations. Carfulan makes use of the following tools for these purposes which are
budgets, CVP analysis and pricing strategies.
 Budgets-
 A budget refers to preparation of a financial plan which is an estimate of
expenditures and revenues over a particular period of time.
 The types of budgets used in an organization are as follows-
 Cash budget-
 A cash budget refers to an estimate of cash receipts and expenditures over a
particular period of time
 Operating budget-
 An operating budget refers to estimation of operating expenses and revenues over
a particular period of time.
 Sales budget-
 A sales budget refers to estimation of sales revenue and other related expenses
over a particular period of time.
Advantages and Disadvantages of different
types of planning tools

 Advantages-
 Control- Budgets provide the much-required control over a business which
helps in achieving efficiency and effectiveness in operations
 Focus on goals- Budgets help an organization to be focused on achievement of
goals and objectives.
 Disadvantages-
 Time required- It takes a lot of time to prepare a budget which can turn out to
be disadvantageous for the organization.
 Strategic rigidity- Preparation of budget leads to strategic rigidity and
therefore flexibility is reduced.
Continued...