Accounting Report: Financial Reporting and Gross Margin Analysis

This report delves into the significance of management accounting within organizations, emphasizing its role in financial performance management. It explores the principles of management accounting and the responsibilities of accounting and financial managers. The report uses a scenario inv...Read More

ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
Scenario 2........................................................................................................................................3
Explanation about the importance of financial reporting for Para Sighting as a tourism
company......................................................................................................................................3
Calculation of the gross margin of the company using income statement report.......................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Management accounting is very crucial aspect within the organisation that helps to
organisation in managing financial performance of business. Management accounting is an
investigation of bookkeeping, money related and administration which use particular business
ability with a specific end goal to control the cost brought about by association (Ax and Greve,
2016). In the current report, role of the management accounting and its several principles has
been discussed. In addition to this, responsibility of accounting and financial manager has been
also discussed in this report.
Scenario 2
Explanation about the importance of financial reporting for Para Sighting as a tourism company
Financial reporting involves several kinds of the financial information that can be use to
various stakeholder about the financial position and financial performance of the organisation
over a specified period. The major objective of the financial accounting is to deliver effective
information to the management of the company (Brown and et.al., 2016). This information
assists to the Para sighting company in develop effective planning, analysing the performance
and taking business related decision in effective and efficient manner. In addition to this, with
help of financial reporting, company can easily develop a systematic planning and analysing the
performance of existing business. This financial reporting also helps in providing information to
investors, promoters, debts providers and creditors which is used to enable them to male
rationale and prudent decision regarding investment and credit.
In the Para Sighting company, financial reporting helps to the organisation to comply
with various status and regularly requirements. This financial reporting assists to the organisation
in raising capital both domestic and overseas (Daskalakis, Devanur and Weinberg, 2015). In the
cited venture, with help of para sighting company, this financial reporting also helps in
delivering information to various stakeholder regarding performance management of the
company. It also assists to organisation in raising the capital both domestic and overseas.
Calculation of the gross margin of the company using income statement report
Quarter 1
Table 1: Income statement for marginal costing
Particulars Amount Amount

Sales (75000*10/unit)
Less: Variable costs of sales
cost of material used in manufacturing
Cost of labour
Variable overhead
Less: Fixed costs
Fixed overhead cost
owners equity
Depreciation
income tax
account receivables
account payable
20000
10000
2500
200000
10000
15000
35000
45000
750000
717500
50000
305000
412500
Working Note 1: Calculation of per unit cost under marginal costing
Table 2: Income statement for absorption costing
Particulars Amount Amount
Sales (75000*10)
Less: Cost of Sales:
cost of material used in manufacturing
Cost of labour
Cost of goods sold
Fixed overhead cost
owners equity
Depreciation
income tax
account receivables
account payable
20000
10000
50000
200000
10000
15000
35000
45000
750000
720000
355000
365000

Working Note 1: Calculation of per unit cost under absorption costing
Quarter 2
Table 3: Income statement for marginal costing
Particulars Amount Amount
Sales (75000*20/unit)
Less: Variable costs of sales
cost of material used in manufacturing
Cost of labour
Variable overhead
Less: Fixed costs
Fixed overhead cost
owners equity
Depreciation
income tax
account receivables
account payable
20000
10000
2500
200000
10000
15000
35000
45000
1500000
1467500
305000
1162500
Working Note 1: Calculation of per unit cost under marginal costing
Table 4: Income statement for absorption costing
Particulars Amount Amount
Sales (75000*20)
Less: Cost of Sales:
cost of material used in manufacturing
Cost of labour
Cost of goods sold
20000
10000
1500000
1470000

Fixed overhead cost
owners equity
Depreciation
income tax
account receivables
account payable
50000
200000
10000
15000
35000
45000
355000
1115000
CONCLUSION
From this entire report it has been concluded that management accounting is vital
viewpoint for each business association through which firm can decide and build up an efficient
getting ready for money related assets. With help of this viewpoint, organization can create
yearly report for every budgetary action. It has been also summarised that Budget report help to
organization proprietors break down their company's execution and if firm is sufficiently huge,
administrators investigate their area of expertise's execution and control costs.

REFERENCES
Books and Journals
Ax, C. and Greve, J., 2016. Adoption of management accounting innovations: Organizational
culture compatibility and perceived outcomes. Management Accounting Research.
6798(5). pp.59-74.
Brown, J. and et.al., 2016. The Effect of Budget Framing and Budget Setting Process on
Managerial Reporting. Journal of Management Accounting Research.
Daskalakis, C., Devanur, N. and Weinberg, S.M., 2015, June. Revenue maximization and ex-
post budget constraints. In Proceedings of the Sixteenth ACM Conference on Economics
and Computation. 6(4). pp.433-447.