Management Accounting Refers Processes †Myassignmenthelp.com

Question: How Management Accounting Does Refers To The Processes? Answer: Introduction In this report, analysis of management accounting system has been undertaken. Management accounting is vast field of knowledge that includes various concepts that can be used in the business decision making. In this report various types of concepts related to management accounting system and how they can be used in decision making process has been undertaken. In this report, capability of management information system in terms of providing information to various level of managers has been discussed. This report includes the discussion on customer and shareholders value enhancement. Concept of management accounting Management accounting is the field of study under which accountants or financial managers of the business organization uses decision making or some useful information. Useful information includes information related to business operations, business processes and business performance that can be used in the decision making process. Management accounting is separate field from financial management and cost management, which uses information, created or generated by both financial management and cost management (Adebayo, 2011). Main aim of management accounting is to generate information that can be applied or used by managers to improve efficiency of business processes. Ultimately lead towards efficiently achievement of organizational goals and objectives. With reference to the above statement, identify and describe major processes and techniques that the management accounting system uses to gather organizational information required by internal managers. Management accounting system: In order to analyze effectiveness and efficiency of management accounting, its tools and techniques shall be understood. Management accounting system refers to management system, which of this system managers and management generate useful information and can be used in decision making process (Mohsen, Habib Farideh, 2011). There are various tools and techniques of management accounting that can be used or employ by the internal manager of the business organization to generate useful or decision making information. Following are some tools of management accounting: Financial statement analysis: Analysis of financial statements is the most widely used tool or technique of management accounting that is used for the analysis of financial statements of the business organization. Financial statements include income statement, statement of financial position, statement of cash flow and statement of change in equity. Internal managers of the business organization are required to take decisions related to business operations and for the same some information is required. Analysis of financial statements provides information related to profitability, solvency position, efficiency of business operations and liquidity in the working capital (Bol, Kramer Maas, 2016). Therefore on the basis of information generated by financial statements analysis, internal manager take business decisions. Budgetary control: Budgetary control is the technique or tool of management accounting sunder which various budgets are prepared for future course of activities. Budgetary control is the process of preparing and approving budgets from management for further processing. Budgets are most valuable technique of management accounting which is used by internal managers for controlling and managing business operations (Daniel, Senarath Steven, 2014). Budgets can be prepared for sales, purchase, expenses and other functional areas of business entity and will assist and support decision making process of managers or management. Decision accounting: Decision accounting can be define as that branch of accounting, under which some useful information is generated and analyzed by managers in decision making process. This technique of management accounting system is used to analyze different situation in the business operations and calculate and profit under each situation. Managers of the business organization will be available with useful information and they can use same in decision making process (Zoni, Dossi Morelli, 2012). Explain how management accounting information system helps managers to use organizational resources efficiently and effectively. Management accounting system supports business organization in development / formulation and implementation of strategies or business strategic plans. For successful development or formulation of business strategies, organization requires data and useful information. In management accounting system there are many techniques that can be used to generate decision-making information in terms of managing and controlling various resources of business organization. Management accounting system has the ability to generate information related to each and every aspect of the business organization (Roodposhti, Nikoomaram Mohammad, 2012). By applying techniques and tools of management accounting, internal managers will be able to analyze and evaluate deficiency or problem areas. In order to overcome such situation or make improvement in business operations, managers are required to develop strategic plan that will lead assist manager. With the help of management accounting system future course of activities are known in advance with the help budgetary control technique. This will enable internal manager of different sections or different functional areas to analyses requirement of resources required to achieve budgeted target. Resources can be various types i.e. financial resources, operational resources, workers / employee, etc. Therefore with the help of management accounting system, manager can analyze resource requirement and then can assign tasks to specific resources (Mawali, 2013). Management accounting system also support internal manager of the business organization to manage and improve efficiency of various resources used in the business operations. With the virtue of management accounting system, manager can set standards for various business operations. In other words, benchmarking technique can be used in the business operations that will assist internal manager to control and provide direction to various resources of the business organization. Variance analysis of management accounting system shall be used here to manage and improve efficient and effectiveness of the business operations. Critically analyse how organizational managers information needs are diverse, and explain the way that contemporary management accounting system meets these diverse information needs of internal managers. 320 words. In assessing information need of managers, firstly understanding of different level of management is required. There are three level of management i.e. strategic level, middle level and lower level management. Each level of management requires different information for taking decisions for betterment of business operation and lead towards achievement of organizational objectives. Following are information need of managers at different levels and how management accounting system is used to meet information need at each level: Strategic level management: Managers or management at this level requires information to formulate and develop business strategies, define organizational goals, interaction with external environment and many other aspects are examined by top management level. Strategic level managers require more of external environmental information that can be used in developing strategies. Information like economic condition, inflation rate, interest rate, availability of finance etc is required by at the strategic level of management (Hammad, Ruzita Imam, 2013). Management accounting system provides information of level of business operations, capacity of business operations, financial performance and position of organization (ratio analysis), level of capacity to be achieved, state of available resources with the organization, etc are some decision making information that management accounting system provided to top management. Middle level management: These managers are associated or indulge in the activities related to panning sub plans, controlling business operations, managing workforce and many other tasks. Middle level management requires information related to resources required to implement business strategic plan (formulated by top management), available financial and operational resources, human resource management information, financial resource management information, etc. Management accounting system is used for the purpose of satisfying information need of middle level management by facilitating them with by providing information related to cost of sales and profitability level (Gillingham, 2015). Managers at middle level can generate decision useful information in terms of performance of each resource. With these information middle level managers is able to take decisions. Lower or operational level management: At this level of management, employees or workers do not require much information. This level of management, employees or workers is not delegated with the authority of decision making. Therefore at this level, information from management accounting system is not required as compared to other two levels of management (Generational diversity: What nurse managers need to know, 2013). Day to day information from management accounting system is required at this level like level of stock, cash balance, reporting issues, budgets to be implemented, reports generated by management accounting system in terms of performance, benchmarking done with the use of management accounting system, etc. Describe what is meant by enhanced customer value and shareholder value, and explain why many companies believe that improved customer value and shareholder value is important. Customer value: Customer value in the decision making process can be define as the process that customers of the business organization uses to analyze and evaluate benefit of purchasing decision against cost of product or services. In terms of customers, price of product and effectives in terms of services is the decision making factor. But for business organization, in order to enhance customer value, various areas are to be analyzed and evaluate in terms of change (Aparna, 2012). In modern business practices customer involvement and customer value creation is important in order to retain customers. Enhancing customer value is the primary requirement of business organization, customers is the only source of revenue for the business organization. Unsatisfied customer will directly impact sales revenue and this will ultimately results in low profitability and higher expenditure. For business organization enhanced customer value can lead to brand development or enhanced goodwill among market place (Kim, Cavusgil Cavusgil, 2013). Shareholder value: Shareholders value is the concept under which value to each shareholder has been provided. It is management ability and efficiency that provide value to shareholders. Value is intangible phenomena but impact of same can be assessed. A shareholder value is largely depends on business performance of business organization and strategic decisions that management takes (Hall, 2016). Shareholders value can reflect in share price or price of share can be used as to decide whether value is created or not. Shareholder value impacts goodwill of the business organization. Shareholders are main investors in the business organization that support business activities. Therefore retention and development of shareholders through value creation is required. In modern market place, there are various options for investor or prospective shareholders to invest in. Therefore business organization needs to enhance shareholders value so as to retain and attract new investors (Narang Kaur , 2014). Using examples from the annual report of a selected listed company outline how managers of that company improve customer value and shareholders value. Qantas Airline limited is the business organisation that has been selected for this task. Qantas Airline limited is Airline Company engaged in providing services of airlines to their customers. Managers and management has to create customer value and shareholder value so as operate business operations smoothly. Following are some decisions by which manager can maintain customer value and shareholder value: Customer value creation: By providing quality products or in case of Qantas Airline limited services to the customers, can create value or enhance customer value. Creation of win-win price of service by Qantas limited is another value creation technique can be of offering low price to customers by lowering profit margins (Zhang Liu, 2017). Undertaken customer analysis technique and identify most loyal and valuable customer and develop specific strategies for them. Shareholder value creation: It can be achieved by providing constant dividends to shareholders. Business organisation is required to generate highest level of sales revenues and ultimately earn adequate profits for shareholders (Gong, 2011). Earnings per share and economic profits are two base for enhancing value for the shareholders. Conclusion It can be concluded that management accounting system is required at each and every stage of business operations of business entity. Ratio analysis, budgetary control and decision accounting are techniques or tools of management accounting system. Management accounting system can be used at all three levels of management i.e. strategic, middle and operational level. Managers at every level require information for decision making. Theses information can be internal information or external information and this can achieved through management accounting system. Customer and shareholder value enhancement is required to be achieved by the business organisation to retain customers and investors. References Adebayo Agbejule. (2011). 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