Table of Contents
1.1 Explain management accounting and give the essential requirements of different types of management accounting systems (P1
Essential requirements of different types of management accounting systems.
1.2 Explain different methods used for management accounting reporting (P2)
2.1 Calculate costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption costs (P3)
3.1 Explain the advantages and disadvantages of different types of planning tools used for budgetary control (P4)
3.2 Compare how organizations are adapting management accounting systems to respond to financial problems (P5)
Introduction of the basics of management of accountings implied in the environment of a business which is broader and the organization functioning in this environment is the main aim of this report. Here the investigation method the management of accounting utilizes to use the financial data to support in planning the decision and in administration and supervision of the organizations’ finance has described in the report. Successful accomplishment of this report will make the students able to present the financial statement in the concept of the workplace and give assistance to the senior colleagues in the planning of the financial business.
Moreover, we will gain the basic knowledge and skill to improve and enter into the study of higher level. In the administration of the small company’s performances and in taking preparation regularly during the accounting period according to need, the owners and managers can get help from the Management accounting. A request for reports which can be quarterly, monthly, weekly, or even daily can be done by the owner or the manager based on the kind of project and information’s time sensitivity.
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1.1 Explain management accounting and give the essential requirements of different types of management accounting systems (P1)
Definition of management accounting
As CIMA (2017) conducted a study that stated that, for operation and preservation of the value of the organization, management accounting aids in sourcing, analysis, communication, and utilization of decision-related financial and non-financial data. Horngren et al. (2013) disclosed that for achieving the goal of an organization, the method of identification, measurement, analysis, interpretation, and communicating the information is called management accounting. In brief, a combination of accounting, finance, and management with the modern techniques which are needed to operate a prosperous business is called management accounting.
Major functions of management accounting
Following the statement of Sharma (2016), there are four fundamental functions in which management accounting applies and they are (1) Planning. (2) Organizing (3) Controlling, and (4) Decision-making. When the managers perform these managerial factors, the management accounting supports the managers in a significant way.
Outlining an interim and longstanding plan and activities to gain a specific end is called planning. The planning involving financial issues by which it is determined the way of resources are going to be collected and utilization of the resources in a certain period of time is called budget (Horngren et al., 2013). Both plannings are intermixed with management accounting as information needed for decision making is provided by it and the development of the whole budget procedure depends on it. For creating a report for estimating the consequences of the substitute actions for gaining the ultimate goal of the enterprise, managers can get help and support from management accounting. According to Sharma (2016), along with the determination of the profit which is a target in a year, the process of achieving the target also should be determined………………