Question

explain different methods used for management accounting reporting

Answer 1

Answer:

Different menthods used for management account reporting:

1). Analysis of financial statements: The analysis and interpretation of financial statements are an attempt to determine the significance and meaning of the financial statement so that a forecast may be made of the prespects for future earning, ability to pay interest and debt maturities (both current and long-term ) and probability of a sound dividend policy.

2). Standard costing: It is an important tool of cost control. On the basis of previous year's experience the standards are decided for the cost of each product regarding normal capacity of production and for every stage of production. The variance is calculated by comparing the actual cost with standard cost of production. The variances are called out and necessary controlling steps are taken to keep thecost favourable.

3). Marginal costing: This method plays an important role in the decision-making. The cost is dividend in two parts namely, fixed and variable. For the determination of net income, the fixed costs are deducted from the contribution margin amount. Marginal costing includes the cost volume profit and break even analysis too.

4). Replacement cost accounting: While determining the profits, replacement cost of assets is considered in this accounting system. The main objective of this system is to make aware the investors of the organization regarding the security of their investment.

5). Budhetary control: A budget is a quantitative expression of plan of action and budgetary control is a technique of managerial control through bugets. In this technique, future needs are estimated and arranged according to an orderly basis. In the budgetary control, on the basis of past years experience, numerical magnitude. Next year, the same are compared with actual date for measuring the business efficiency. It is an important method of reporting the business operations on a timely and effective basis.

6). Other management accounting reporting menthods: Decision accounting, Financial planning, Linear programming, Game theory, Operational research, Project evaluation, Control accounting etc.