Accounting 1.docx

NGUYỄN THU HẰNG – GBH17529

Contents LO 1: Demonstrate an understanding of management accounting systems .................................... 2 P1: Explain management accounting and give the essential requirements of different types of management accounting systems. ...................................................................................................... 2 P2: Explain different methods used for management accounting reporting. ................................ 4 P5: Compare how organisations are adapting management accounting systems to respond to financial problems. ................................................................................................................................. 8 M1: Evaluate the benefits of management accounting systems and their application within an organisational context.......................................................................................................................... 12 M4: Analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success. .............................................................................................. 12 D1: Critically evaluate how management accounting systems and management accounting reporting is integrated within organisational processes ................................................................. 12 D3: Evaluate how planning tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success. ................................................................ 12 References ................................................................................................................................................ 13

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LO 1: Demonstrate an understanding of management accounting systems P1: Explain management accounting and give the essential requirements of different types of management accounting systems. According to BTEC (2018) management accounting, also known as management accounting or cost accounting, is the process of analyzing business and operating expenses to prepare internal financial statements, records and accounts to support too. Decide the decision of the manager in achieving the business goals. In other words, it is the act of making sense of financial data and costs and translating that data into useful information for management and staff in an organization for users in: Planning Planning must occur at all levels. First of all, it happens at the abnormal state of setting methodology. It at that point moves to wide based pondered how to set up an ideal "position" to amplify the potential for acknowledgment of objectives. At last, planning must give insightful thought to money related substances/imperatives and foreseen fiscal results (spending plans) (principleofaccounting.com., n.d). A business association might be comprised of numerous people. These people must be organized to cooperate in agreement. It is essential that they share and comprehend the hierarchical plans. To put it plainly, "everybody should be in agreement." With such, clear correspondence is basic (principleofaccounting.com., n.d). Control The managerial bookkeeper is a noteworthy facilitator of this control process, including investigation of elective remedial procedures to cure negative circumstances. 2

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What's more, an ongoing pattern is for improved inner controls and obligatory accreditations by CEOs and CFOs with regards to the precision of money related reports. These accreditations convey punishments of prevarication, and have gotten the consideration of corporate administrators. This has prompted significantly extended accentuation on controls of the different inner and outside revealing components (principleofaccounting.com., n.d). Performance evaluation Performance evaluation is the assessment of the profitability of each product and product line, identifying the relative contributions of different managers and different parts of the organization. In nonprofit organizations, performance assessments are evaluating the effectiveness of managers, departments, and programs (BTEC, 2018). A management accounting system collects financial data from business operations such as sales data, inventory changes and material cost changes, and then transfers information to the analysis report (BTEC, 2018). Integrated accounting systems: It is always a smart business decision to choose an integrated accounting management system with the company's financial accounting system. This eliminates redundancy and improves the timeliness of management reports (BTEC, 2018). Requirements of accounting skills Organizational skills One of the most important accounting skills is organizational capabilities. The most successful accountant is detailed navigation since everything must be added exactly to the bottom line and every cent a business must be accounted for. This also involves in working extremely comfortable and monitoring large amounts of data (Krakoff, n.d). In addition, accountants must be often responsible for a variety of different systems that require ongoing maintenance and updating. They must be good planners, as accountants must constantly advance to their next term, and have strong time 3

NGUYỄN THU HẰNG – GBH17529

management skills. On top of this, the accountant must be able to keep up with the high level of the organization even under pressure, especially during busy times like the tax season (Krakoff, n.d). Financial skills The most obvious skill for an accountant is having a database of financial data. By the most basic definition, an accountant is the manager, auditor, and financial analyst of a business or individual. As a result, some of the most important skills in accounting include the ability to apply financial frameworks used by businesses to prepare financial statements and complete other financial tasks (Krakoff, n.d). A good accountant will be able to apply professional judgment when preparing, analyzing and interpreting financial information, and will be able to perform these tasks in a way that reflects both the art and accounting science. . Accountants may also be required to evaluate an organization's accounting system to ensure sound financial information, generate appropriate asset assessments, and reduce the risk of fraud. They also feel comfortable assessing the ethics of financial decisions and should be cautious in their reports (Krakoff, n.d). Customer Service Oriented Whether you work in public or private accounting, solid customer service skills are very important. If you work in a public accounting company, it is essential that you retain existing customers and bring in new customers. If you work in business accounting, you must meet the needs of departments and other managers of the organization. The accounting expert can prove good customer service by really listening to the needs and concerns of your customers, whether they are internal or external. A positive attitude can also go a long way, especially when the stress level is high and be careful not to overpromise when it comes to deadlines or deliverables (Half, 2018). P2: Explain different methods used for management accounting reporting. Cost report

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Managerial accounting decides the price of things. This is finished by taking the entire new item prices, overhead, work, and some other prices into thought. The whole costs are partitioned by sums of things made. In a cost report, the entire information is brief and this last cost report empowers administrators the capacity to see the prices of merchandise versus offering costs. It likewise enables director to design and oversees pay limits (steemit, 2018).

In this report, the manager take the audit, amount and the budget depend on the hours. Besides, they plus all the function and take the total of the days, months or year. Budget report A major component of Management Accounting is spending planning. Budgeting is usually done using financial plans of previous years and adapting to future projections. An organization's expenditure lists all sources of income and expenses. An organization tries to accomplish its goals and objectives while still in the budget. Managers regularly 5

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look for new sellers to use as raw material providers for backup. They also explore ways to expand transactions while reducing costs (BTEC, 2018).

This report shows the variable cost and fixed cost, the typical functions in budget cost. In addition, they take each of the function the flexible budget and actual budget. After all they could find the total variable costs and total fixed cost and the total overhead. Inventory and Manufacturing The Manufacturing and Trade Inventories and Sales estimates are based on data from three surveys: the Monthly Retail Trade Survey, the Monthly Wholesale Trade Survey, and the Manufacturers’ Shipments, Inventories, and Orders Survey. Data for the wholesale and manufacturing sectors are unrevised from the most recent Monthly Wholesale Trade Report and the Full Report on Manufacturers’ Shipments, Inventories and orders. Data from the Retail sector is revised and presented in more detail from the most recent Advance Economic Indicators Report (Census.gov, 2018) .

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The report shows about the current assets such as cash and cash equivalents, investment, material and so on. Therefore, they could find the prepaid expenses of the assets of the company.

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P5: Compare how organisations are adapting management accounting systems to respond to financial problems.

Budgeting and cost accounting system Budgeting and cost accounting system consist of the appraisal of cost, the setting of an agreed budget, and manage actual cost against budget (apm.org.uk., n.d). Initial cost estimates could be parallel. These are refined as the feasibility and desirability of the investigated and a large understanding of scope, schedule and resources is developed. Once approved, these refined the basis of the cost is the baseline cost. A profile of expenditure is designed by allocating costs activities in a timeline (apm.org.uk., n.d). Management control framework A control framework is a data structure that organizes and categorizes an organization’s internal controls, which are practices and procedures established to create business value and minimize risk (Rouse, 2011). Contingency theory

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The contingency theory explains that there are specific situational factors that can affect the direct relationships between independent and dependent variables in the study of organizational behavior. Independent variables (x) are the cause of the change in the dependent variable, while dependent variables (y) are a response affected by an independent variable (study.com., n.d). The basic premise of Contingency Theory is that there is no one best way to lead an organization. There are too many external and internal constraints that will alter what really is the best way to lead is in a given situation. In other words, it all depends upon the situation at hand as to what will be the best course of action (business.com., 2017).

ABC (Activity based cost) Activity based costing ABC is a method for assigning costs to products, services projects, tasks, or acquisitions, based on activities that go into them and resources consumed by these activities. ABC contrasts with traditional costing (cost accounting), which sometimes assigns costs using somewhat arbitrary allocation percentages for overhead or the so-called indirect costs. As a result, ABC and traditional cost 9

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accounting can estimate cost of goods sold and gross margin very differently for individual products. Contradictory and uncertain cost estimates can be a problem when management needs to know exactly which products are profitable and which are selling at a loss (Businesscaseanalysis.com, 2018)

ABC (Activity Based Cost) are composed of overhead cost, direct costs such as direct materials costs and direct labour costs and indirect costs. Moreover, cost driver is typical in ABC (Activity Based Cost) and changes every situations. Strategic cost management Strategic cost management is the process of reducing total costs while the manager makes progress of the strategic position of a company. This goal can be achieved by thoroughly understanding the cost supporting of a company's strategy and what costs undermine or not influence it. The cost reduction initiatives should focus on those costs in the second category. Conversely, it can be helpful to increase the cost of supporting the strategic location of the business (Accountingtools. com, 2018).

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For example, the strategy of a manufacturing company is to be able to provide rapid change of customer orders by maintaining strict control over its bottleneck operations. In contrast, cutting costs at bottleneck operations will reduce the production capacity of the business and will have an immediate negative impact on its profitability. From a strategic point of view, the company will do better to cut costs in bottleneck bottlenecks downstream from the bottleneck, as these cuts will not affect delivery times (Accountingtools.com., 2018).

Balanced scorecards The balanced scorecard (BSC) is a strategic planning and management system that organizations use to make communication about what they are trying to manage; coordinate the day by day work that everyone do; take the projects, products and service in prioritization; strategic planning and management system that organizations use to and control progress towards strategic goals (Balancedscorecard.org, n.d).

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M1: Evaluate the benefits of management accounting systems and their application within an organisational context. M4: Analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success. D1: Critically evaluate how management accounting systems and management accounting reporting is integrated within organisational processes D3: Evaluate how planning tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success.

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References Principleofaccounting.com., n.d. “Planning” Available at: https://www.principlesofaccounting.com/chapter-17/planning/ [Accessed: 4/6/2018] Steemit., 2018. “methods of management accounting report” Available at: https://steemit.com/management/@zainqureshi/methods-of-managementaccounting-report [Accessed: 4/6/2018] Rouse, M., 2011 “Management control framework” Available

at:

https://searchcompliance.techtarget.com/definition/control-framework

[Accessed: 8/6/2018] Business.com., 2017. “Contingency theory” Available

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https://www.business.com/articles/contingency-management-theory/

[Accessed: 7/6/2018] Study.com., n.d. “Contingency theory” Available

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https://study.com/academy/lesson/contingency-theory-definition-and-

significance-to-organizational-behavior.html [Accessed: 8/6/2018] Businesscaseanalysis.com., 2018. “Activity based cost” Available

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https://www.business-case-analysis.com/activity-based-costing.html

[Accessed: 9/6/2018] BTEC, 2018 “Lecture 1” Available

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https://drive.google.com/drive/u/1/folders/1_zP5cTccVgwYimI9ku3mxtLRZAhVmIcU [Accessed: 9/6/2018] 13

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Apm.org.uk., n.d. “Budgeting and cost control” Available

at:

https://www.apm.org.uk/body-of-knowledge/delivery/financial-cost-

management/budgeting-and-cost-control/ [Accessed: 10/6/2018] Census.gov., 2018. “Inventory and Manufacturing” Available at: https://www.census.gov/mtis/www/data/pdf/mtis_current.pdf [Accessed: 10/6/2018] Accountingtools.com., 2018. “Strategic cost management” Available at: https://www.accountingtools.com/articles/strategic-cost-management.html [Accessed: 10/6/2018] Balancedscorecard.org, n.d. “BSC: Balanced scorecards” Available

at:

http://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-

Scorecard [Accessed: 10/6/2018] Krakoff, S., n.d. “Key skills for accountants” Available at: https://www.champlain.edu/online/blog/accountant-key-skills [Accessed: 10/6/2018] Half, R., 2018. “Accounting skills” Available

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https://www.roberthalf.com/blog/salaries-and-skills/the-accounting-job-

skills-you-need-to-succeed [Accessed: 10/6/2018]

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