Question

In: Accounting

Your essay should focus on the challenges facing business when making and implementing decisions. The effectiveness...

Your essay should focus on the challenges facing business when making and implementing decisions. The effectiveness of one or two key management accounting techniques and concepts should feature prominently in your work, as should academic and practical evidence to support or challenge how successfully the techniques achieve their aims.

Solutions

Expert Solution

The effectiveness of one or two key management accounting techniques- Couple of major key management accounting technique as below :

Financial Planning – Main objective of any business Organization is maximization of profit .Financial planning is one of teh best tool in this matter.

Financial Statement Analysis – Financial Statement analysis always help management to understand about revenue growth , business growth , any challenged in relate to revenue + any cost over run . Thsi analysis done through comparative analysis ,ratio analysis etc.

Cost Accounting – complete cost accounting system – product wise ,process wise , department wise . use of standard costing system and determined Favourable + Unfavourable position

Cash flow analysis – Top most important analysis for any organization , With help of this analysis , Management can understand about total cash flow position at Operating , Investment and financial level . This analysis helps to understand any challenge in Working capital movement , any working capital blockage exist or not . With this analysis ,we get to know company total movement of debt issue , repayment , dividend , Interest movement etc .

Marginal costing – With help of this costing system , we can tale decision of “ Make or buy” . We can decide to utilize resources at optimum level . Best way to understand multiple product mix , sales mix , derive of contribution etc

Budgetary control -   This is almost in line with financial planning . Company used to prepare annual budget as well as Quarter budget and do comparison the same and determined variance . Management has to review budget number with Actual position and any negative variance , must be take necessary step


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