Question

This course has covered various aspects of managerial accounting that are meant to give you the foundation needed to understand, analyze and evaluate a company’s performance as a company manager as well as an external user of financial information.

• Given your personal and professional goals, which of these tools will be of greatest benefit to you (describe at least 3)? Why? Be specific.

Answer 1

ANAWER- Managerial accounting is the process of identifying'analyzing,interpreting and communicating information to managers to help managers make decisions within the company and to help achieve business goals.The technique used by managerial accountants are not dicated by accounting standards unlike financial accounting.

The goal is to use the budget to make short term operational decisions that will help increase the company's operational efficiency.Let's say an internet company subscribes to cloud computing services.Monthly prices to rent out space in the cloud have been increased.The internet company's managers can use budgets to see if the price increases are costing too much and decide to reduce cost.

EXAMPLE-The company budgets $100 a week for access to the cloud services and the actual expenditure for the week is $200,managers know there is a 100% variance between budget and actual costs.A managerial accountant would advice to increase the expectations on prices in their budget or move to another provider to meet their budget cost.

The essential tools that helps to get the greatest benefits are as follows:-

1) Fund flow statement:- The fund flow statement helps to analyze the financial status of the company.They helps a check on where the funds are coming from and how they are utilized in the company.

2)Cost Accounting:- There can be the situation when the difference arises between the estimated cost of the product and its actual cost..Cost accounting helps to get the cost data according to the various department,products,branches, and proccesses of the organization.It helps to know the reasons of cost difference.

3)Financial statement analysis:- This technique helps to know the company's financial statement for decision making purpose.External stakeholders use it to understand the overall health of the organization as well as to evaluate the financial performance of the company.Internal constituentes use it as monitoring tools for managing the finances.