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Management Accounting Control System - Essay Example
Pages 10 (2510 words)
In order to run one business effectively, it is essential for one manager to check whether business is keeping accurate records and accounts. Two types of accounting information are basically found in organization such as, financial accounts and management accounts…
The needs of it vary for different organization in accordance to business areas of their concerns. Its needs include:
As stated, preparing management account periodically is recommended but not mandatory. But, for the sake of business it is needed to maintain once in a month or quarterly in a year depending upon company profile and size. It is very hard to run a business efficiently without them.
In this era of information, information system is not getting utilized as it was expected. In management account information needs to be applied properly and adequately. The best way is to break down so that the performance of different elements of the business can be measured. For example, for one integrated Circuit manufacturing company, different flows can be broken up and later on aggregated. Flows may include mask design, photolithography, oxidation and etching etc. Or, if a manufacturing industry has various processes such as, molding, embossing or welding then they can be segmented as per their sequence and finally need to be mapped together. If any financial institution is taken under consideration then, it might have more than one sales outlet and for this case separate report for each outlet is required.
Management account specifically analyzes performances and includes sales, cash-flow and profit forecast which are treated as forward look ...