Unit 5 Management Accounting Assignment (GC01333)

Table of Contents

Introduction.

Task 1.

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)

Task 2.

2.1 Calculate costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption costs (P3)

Tasks 3.

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)

Conclusion.

References.

Introduction

Introduction of the basis of management of accountings implied in the environment of a business which is broader and the organization functioning on 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. Both financial and management reports can be done on regular basis by management people of business.

Task 1

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 which stated that, for operation and preservation of the value of the organization, management accounting helps to develop communication and make effective business decisions about financial as well as non-financial data. Horngren et al. (2013) disclosed that for achieving the goal of the organization, the method of identification, measurement, analysis, interpretation and communicating the information is called management accounting. In brief, a combination of accounting 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 to 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.

Planning

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 the 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 the 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.

Organizing

According to Horngren et al. (2013), the procedure of constructing an organizational substructure and giving accountability to the people, who work in the organization for gaining the goal or reach the destined target, is called organizing. The substructure of organizations differs from one to another. The procedure of organizing involves departmentalization which is done by establishing divisions, departments, sections, branches. Clarification about every manager’s responsibility and boundary of the authority is required to do the organizing. The departments and units are organized in an order where through formal communication the orders are passed down from the top level to the low level or the situation and information are passed from the low level to the top level. In case of slight alternating situations, the reports and information are monitors and adjusted to control the situation by organizing via the manager and here manager gets help from the management accounting. With the aid of management accounting creating reports on product lines depending on which the manager will make a decision whether the products should be added or eliminated in the present product mix. In addition, as Sharma (2016) stated, managers also can get sales reports, production reports provided by management accountants for initiating appropriate actions about the sales and production position…………………………

Accounting & Finance