management accounting ASSIGNMENT 1

LO4 Compare ways in which organizations could use management accounting to respond to financial problems.. M1 Evaluate thebenefits of managementaccounting systemand their applicationwi

ASSIGNMENT 1 FRONT SHEET Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 5: Management Accounting (489)

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P1 P2 P5 M1 M4 D1 D3

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Assignment Brief 1 (RQF)

Higher National Certificate/Diploma in Business

• This assignment is an Individual report and specifically

• You must use font Calibri size 12, set number of the pages and use multiple line spacing

at 1.5 Margins must be: left: 1.25 cm; right: 1 cm; top: 1 cm and bottom: 1 cm

• You should use in text references and a list of all cited sources at the end of the essay

by applying Harvard referencing style

• The recommended word limit is 1500-2000 words (+/-10%),

excluding the tables, graphs, diagrams, appendixes and references You will not be

penalized for exceeding the total word limit

• The cover page of the report has to be the Assignment front sheet 1 (to be attached with this assignment brief)

Submission

• Students are compulsory to submit the assignment in due date (slot 38) and in a way requested by the Tutor

• The form of submission will be a soft copy posted on http://cms.greenwich.edu.vn/

• Remember to convert the word file into PDF file before the submission on CMS

Note:

• The individual Assignment must be your own work, and not copied by or from another student

• If you use ideas, quotes or data (such as diagrams) from books, journals or other

sources, you must reference your sources, using the Harvard style

• Make sure that you understand and follow the guidelines to avoid plagiarism Failure to

comply this requirement will result in a failed assignment

Unit Learning Outcomes:

LO1 Demonstrate an understanding of management accounting system

LO4 Compare ways in which organizations could use management accounting to respond to

financial problems

Assignment Brief and Guidance:

*This assignment guidance is for reference only and can be customized by the tutor to meet specific needs

In this scenario, you are a member of the Financial Governance committee of [ an

organization of your choice.] Your committee has to prepare an annual

report for the shareholders’ meeting and you are in charge of writing this time Currently, theshareholders take a special interest in expanding the operation, improving efficiency andethical financial governance US/UK based corporations are highly recommended for thisassignment due to the availability of the information

In the beginning you should write a short introduction for the corporation, summarizing themost recent financial performance of the company

To address the shareholder’s concerns, you need to do the following:

1 Describe to the shareholders the main objectives of internal accounting activities ingeneral The report will have to clarify the responsibilities of management accountants

in the specific context of your organization You will provide the company’s accountingreports as evidences for identified responsibilities

2 Discuss the importance of ethical and responsible financial governance to business ingeneral To further enhance the argument, you should identify real life example ofcompany failing in the market due to poor financial governance Next, propose somerecommendation to improve the company’s financial governance policy by applyingplanning tools

3 Due to the recent expansion plan, the Board of directors want to hire moremanagement accountants You will need to identify the required traits and skills of theposition to the Human resource department

4 Lastly, write a short conclusion by summarizing all the key points above

Learning Outcomes and Assessment Criteria (Assignment 1):

M1 Evaluate thebenefits of managementaccounting systemand their applicationwithin an

organisational context

D1

Critically evaluatehow managementaccounting systemand managementaccounting reporting

is integrated withinorganisational process

management accounting systems to respond tofinancial problems

M4 Analyze how, in

responding tofinancial problems,management

accounting can lead organisations to sustainable success

D3 Evaluate howplanning tools foraccounting

respond appropriately

to solving financialproblems to leadorganisations tosustainable success

Introduction:

In this assignment, I am going to explain management accounting in detail apply to thebusiness environment In the first part, I am going to explain management accounting and different kinds

of management accounting systems In the second part, I am going to explain different methods used for

management accounting reporting In the final part, i am going to compare how organizations are

adapting management accounting systems to respond to financial problems

P1 Explain management accounting and give the essential requirements of different types of

management accounting systems

1 What is management accounting and application of management accounting?

a Management accounting is the process of identifying, analyzing and transferring information to people within an organization (Appelbaum and Kogan, 2017)

b Application of management accounting to:

Know each component of the cost, calculate and synthesize production costs and costs for each type of product, each type of service

Develop budget estimates for operational objectives

Control the implementation and explain the reasons for the difference between cost estimates and actual costs

Provide the information needed to make reasonable business decisions (Appelbaum and Kogan, 2017)

2 Role and principles of management accounting?

a Main roles of management accounting: Firstly,

management accounting provides information to assist the manager toanalyze, select and make final decision to achieve business’s objective Inaddition, it provides information for planning, controlling, performing,measuring and improving In particular, planning help enterprise to measurethe budget and materials which are required to achieve objectives Managing isable to help company immediately response to the problems and improvingoperation’s efficiency The second main role of management accounting isbalancing the cost which earn from goods and the remaining goods in theinventory for internal and external financial report (Edmonds and Olds, 2013)

b Principles of management accounting: Management accounting principles

were developed to achieve the core benefits and objectives of management toimprove making decision, business' information processes, problems handing,customer value and necessary materials to achieve business' goals (Edmondsand Olds, 2013)

3 Differences between management accounting and financial accounting?

Management accounting Financial accounting Legal requirement Only accepted if it creates

benefit for business

Required to create annual financial accounts

Focus Concentrate on small Concentrate on the whole

departments of the business

Frequencies and precision Short period of time (daily,

weekly, monthly)

Longperiod of time (annually, semi-annually, quarterly

( Source: Appelbaum and Kogan, 2017)

4 Different types of management accounting systems:

a Cost Accounting System: Cost accounting system or costing system is applied

by company estimate the cost of products and goods in the company Costaccounting system is the general accounting method which record company'sproduction cost Then the recorded information is used to compare andevaluated to help the company adjust their activities Cost accounting system isconsidered as the core method in management accounting because it is able tocontrol budget, expense standard, manage cost and inventory and makingstrategy (Edmonds and Olds, 2013)

b Inventory Management System: Inventory management system refers to the

method of controlling and observing the purchasing, recording number ofgoods and products maintain in storage In particular, it is used to record andobserve quantities of goods for sale The aim of inventory management system

is to deeply understand present inventory levels and adjust stock situations Byefficient observation of remain goods, managers will have plan and be able tomaking inventory decisions The inventory of a business is recorded as itsassets so it is important to applied inventory management system Benefits ofthe inventory management system are to assist an organization enhancing therevenue of the company, enhancing inventory accuracy record (Edmonds andOlds, 2013)

c Job-Costing System: Job order costing system is a general

system that is adopted by companies manufactures a vast amount of differentproducts There are two common types of costing system:

• Job- order costing system: The job order costing system is used

when the product and services are produced different from other

and each of them has a particular cost

• Process costing system: the process costing system is used when a

unit of product is mass produced (homogeneous products)

(Edmonds and Olds, 2013)

d Price-Optimization System: Price optimization system is defined as the method

to analyze the cost of products to determine consumers feedbacks to diverseprice for goods and services in different channels and firms It is also adopted

to determine the prices which a company desire to set to achieve theirobjectives (Edmonds and Olds, 2013)

P2 Explain different methods used for management accounting reporting

Different types of managerial accounting reports :

1 Budget report: A budget report is an act of comparing of the real consequences in

business to an estimated budget The budget report is assigned to employeesresponsible for a bills in the income statement The budget report is able to assitcompany in measuring expends for appropriate action It means the company cankeep the expends in budget amount This report is used frequently to manage thefinancial results of a business (Edmonds and Olds, 2013)

2 Account receivables aging report: Account Receivable Aging report records the

number of debt that customers are responsible for pay for a business for

purchased products or services Receivable payment isdefined as debt of customers who purchased a products or service without paying.Receivable payment is usually recorded on credit and is required to pay in a shortperiod of time In the balance sheets, receivable payment is often recorded asasset This form of transaction is applied to some sorts of customers who arereliable and are able to pay debt in short time (Edmonds and Olds, 2013)

3 Job cost reports: It is a report that tracks the on-going cost of a project Some

reports only add the costs after accomplished the job and it can be helpful But it

is lots of helpful if the report tracks the on-going cost while constructing in order

to identify and correct problems before get in to consequences (Edmonds andOlds, 2013)

4 Inventory and manufacturing report: Inventory and manufacturing report is a

report to calculate and measure goods and materials in company These includethe raw materials, components, finished products, warehousing and processingitems Inventory and manufacturing report includes many detail and information

of goods in stock, contain of inbound and outbound This report helps companies

to balancing the risks of inventory gluts and decrease losses in business (Edmondsand Olds, 2013)

5 Performance evaluation report: Performance evaluations report is known as a

general and effective report for showing and recording employee performance andproductivity based on their job results Performance evaluations report is alsoused to providing feedback for employees frequently in order to helps them

concentrate on work and enhance their skills (Edmonds and Olds, 2013)

6 Order information report: Order information report is a report which records the

customer's order in the business This kind of report includes information anddetail from the begin day to the final day of the week, the amount of orders aremade in a period of time, the number of goods and products are sold , the number

of taxes which is paid by customers as a result, it assists enterprises to calculate

the revenue from the begin day to the final day (Edmonds and Olds, 2013)

7 Business situation or opportunity reports: Business situation

or opportunity reports are considered as the profit and loss statement, showingthe number between revenue and cost in every period The report on businesssituation and opportunity is a simple financial report, indicates the situation,opportunities and business results in business administration The main role of thisreport is recording and evaluating businesses' profitability, potential opportunities

to plan and create strategy for future objectives (Edmonds and Olds, 2013)

==> Information should be relevant to the user, reliable, up to date and accurate: Financial information

must be relevant to users 'decision-making needs, which is the case when information affects userseconomic decisions.This may involve the presentation of particularly relevant information, orinformation that is flawed or inaccurate that may affect a user's economic decisions Financialinformation must be free from material errors and false, not misleading.Therefore, the information mustfaithfully represent transactions and other events, reflect the basic nature of the events, and representcautious representations and uncertainties through appropriate disclosure Must request disclosure offinancial information without undue delay

must be equivalent to information presented for other accounting periods, so that users can identifytrends in performance, as well as the financial position of the reporting unit Financial information should

be easily understood by users with reasonable knowledge of commercial and economic activities Thismeans that the information in the financial statements must be clearly presented, with additional

information provided in the notes, as needed, to assist with clarification

P5 Compare how organizations are adapting management accounting systems to respond to financial problems

a Financial indicators: Financial indicators are relationships defined from thecompany's financial information and used for comparison purposes Threetypical examples are often mentioned when talking about financialindicators, the return on investment (ROI), return on assets (ROA), anddebt on equity (debt to equity) ) Usually the measurements or balances ofthis account are found in the company's financial statements, balancesheets, reports of cash flow statements, statement Financial indicators canprovide business owners and managers with a tool to measure theirprogress against a predetermined target, compared to a competitor ortheir overall industry where they are active In addition, tracking manydifferent indicators over time is an extremely effective way to identifytrends in the early stages Although the use of financial indicators has manyadvantages, small business managers should still know the limitations ofthe financial index and approach the index analysis carefully Financialindicators alone cannot provide all the information needed for businessdecisions But the decisions made without considering the financial indexwill be decisions that have not been thoroughly studied and do not makefull use of the information available

b Nonfinancial indicators: Non-financial means are measures used to assessthe activities that an organization considers important to achieving itsgoals Non-financial KPI includes measures related to customerrelationships, employees, operations, quality, cycle time and supply chain

of the organization It shows that the measure that contributes to thesuccess of the final organization is finance

Conclusion:

An organization having an appropriate managerial accounting system is

important for developing Because the managerial accounting system is expected to offermanagement with reliable and accurate information After finish this assignment, I can be capable ofpresenting financial statements in the workplace setting and be in a position to help senior managerswith the business planning of finance Additionally, i could have the fundamental skills and knowledge toprogress to the higher level of learning