Management Accounting Unit 5 Assignment Report and Analysis

This assignment provides a comprehensive overview of management accounting, focusing on key financial reports and concepts. It begins with an explanation of budget reports and their importance in comparing actual business results with the budget, including an example. The assignment then delves into accounts receivable aging reports, detailing their significance in understanding outstanding balances and cash flow. It explores different inventory valuation methods such as FIFO, LIFO, and average cost, emphasizing the need for accurate and up-to-date information in these reports. The assignment concludes with brief explanations of the income statement, balance sheet, and cash flow statement, highlighting their roles in assessing a business's profitability, effectiveness, and cash movements. References are provided to support the information presented.

Management accounting, Unit 5 May 2018 Formative Assignment. P2
Complete the structure to the best of your ability, based on the information about the
assignment case study you have already been given. Bring it to your intern deadlines. If you
submit after the deadline no guarantees will be made as to if/when you will receive feedback.
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Explanation of the budget report and example of Budget Reports
A budget report is a report that helps to compare the actual results of the business with the
underlying budget. This process is accepted as it can help understand the differences and can
also aid the management in identifying the reasons of the variances. The example of the
budget report has been presented below (Swensen, 2018).

Explanation of the accounts Receivable Aging reports and why it is important
Accounts receivable aging report is the report that gives an idea of outstanding balance due at
the end of the customer. This report can help in identifying the, customers, who have paid,
who are about to pay and who are lacking and have nothing to pay. It is important to
understand as it determines the cash involved and the time in which the cash can be recovered
to keep the operations of the business (Medel, Mayer, Monestime and Chien, 2020).
Inventory reports and different methods that are used to calculate the value of
inventory
FIFO method of the valuation of the inventory is the method where the stock is sold on the
rule of first cum first basis. Under this method if the stock units from the previous lot have
been remaining and at the same time the new units are purchased the stock is sold from the
previous lot first, at the previous rate. This process continues in the similar manner.
LIFO method also known as Last in first out method is the process which is governed by the
generally accepted accounting principles. Under this method the most recent products are
being sold on the first basis. Although the LIFO accounting method may result in decrease of
profits of the firm, and it can also mean reduction in corporate tax a company is required to
pay (Karali, Isengildina-Massa and Irwin, 2019).
Average cost of inventory is also one of the methods to record the inventory and it has been
computed by dividing the total cost of goods available for sale by the total units available for
sale.
Explain why the information in the above reports should be accurate, reliable and up to
date?
The information in the above report shall be accurate, reliable and up to date as it can result
in distortion of profits and can mislead the results which can ultimately result in wrong
display of the information. The costing method may vary according to type of the business

and hence, when comparing the performance against the competitor, it is necessary to vouch
the inventory policy first (Islam, Ponnambalam and Lam, 2016).
Briefly explain Income Statement, Balance Sheet statement and Cash Flow statement.
The income statement is one of the primary financial statements that are required to record
the revenue and the expenses. This statement is necessary to determine the profitability and
the efficiency of the business (Minnis and Sutherland, 2017).
The balance sheet is a statement that is used to define the overall effectiveness of the
business. The balance sheet explains the assets, liabilities and the net capital of the owner.
The cash flow statement is the statement that helps in analysing the movement of the cash in
terms of inflows and out flows. The cash flow statement defines the cash from operating
activities, cash from investing activities and the cash from financing activities (Minnis and
Sutherland, 2017).

References
Islam, S., Ponnambalam, S.G. and Lam, H.L., 2016. Review on life cycle inventory:
methods, examples and applications. Journal of cleaner production, 136, pp.266-278.
Karali, B., Isengildina-Massa, O. and Irwin, S.H., 2019. The Changing Role of USDA
Inventory Reports in Livestock Markets. Journal of Agricultural and Resource
Economics, 44(3), pp.591-604.
Medel, A., Mayer, R., Monestime, D.B.A. and Chien, W.W., 2020. Accounts Receivable
Management Strategies in Rural Healthcare Clinics.
Minnis, M. and Sutherland, A., 2017. Financial statements as monitoring mechanisms:
Evidence from small commercial loans. Journal of Accounting Research, 55(1), pp.197-233.
Swensen, D., 2018. ALCTS Budget and Finance Committee-ALA Midwinter 2018.