ASSIGNMENT 1 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 5: Management Accounting (489)

Submission date 30/3/2021 Date received (1st submission)

Re-submission date Date received (2nd submission)

Student name Le Duc Huy Student ID GBD18452

Class Assessor name Pham Uyen Phuong Thao

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Table of Contents
Introduction.....................................................................................................................................3
1. Definition.................................................................................................................................4
a. Accounting...............................................................................................................................4
b. Management Accounting........................................................................................................4
c. Financial Accounting................................................................................................................4
b. Roles of management accounting...........................................................................................5
c. Management Accounting Report............................................................................................6
d. Financial Accounting................................................................................................................8
3. Management Accounting Systems..........................................................................................8
a. Definition.................................................................................................................................8
b. Different of Cost Accounting, Inventory Management, Job-Costing.....................................8
4. financial governance..............................................................................................................10
a. Definition...............................................................................................................................10
b. Importance for the business.................................................................................................11
5. Identifying the financial problems........................................................................................11
6. Personal traits and skills of management accountant.........................................................12
Conclusion.....................................................................................................................................14
References.....................................................................................................................................14
 Introduction
Management accounting is an essential part of a company. This department helps the company
with audit of money related matters. In this report, we will describe to shareholders the main
objectives of the internal accounting practice in general. The report will have to clarify the
responsibilities of the management accountant in the specific context of the organization.
Discuss the importance of ethical and responsible financial governance for business in general.

The structured report is divided into main sections such as the definition of financial and audit
concepts. Next is their importance. In addition, we will outline the definition of a company's
finances and financial affairs. Finally, there are the factors of a good accountant.

1. Definition.
a. Accounting

Accounting is the process of classifying, recording and synthesizing economic phenomena

arising in an enterprise in order to provide information about the financial situation of an
enterprise to users of information (Elmar, 2020). Accounting information helps managers to
evaluate the competitiveness of an enterprise in the market. From there, businesses will come
up with suitable business strategies to improve the quality of products and services.

b. Management Accounting

Also known as managerial accounting or cost accounting, it is the process of analyzing business
expenses and operations to prepare internal financial statements, records and accounts to
assist managers in the decision-making process. intention to achieve business goals.
Management accounting handles many aspects of accounting. These include margins,
constraints, capital budgets, trends and forecasts, pricing and product costs (Colin, 2020).

c. Financial Accounting

Financial accounting is the job of collecting, checking, processing, analyzing and providing
economic and financial information by financial statements to those who need to use
information (Anne, 2013).

Financial accounting reflects the reality and changes in the capital and assets of the enterprise
in general form or reflects material and monetary flows in the relationship between the
enterprise and the external economic environment.

2. Main objectives and responsibilities

a. Functions of management accounting

The main functions of Management accounting are

 Helping Forecast the Future

Forecasts help make decisions and answer questions like whether a company should invest in
something. Management accounting helps to answer important questions that can forecast
future business trends (Schuster, 2021).
  Help make buying or buying decisions

Management accounting's understanding of costs and production availability are the deciding
factors in purchasing choices. Data from managerial accountants empower decision-making at
both operational and strategic level (Schuster, 2021).

 Cash flow forecast

It is essential to estimate cash flows and their impact on business operations. Considering the
costs companies will incur in the future and where their revenue will come from can help a
business take the next steps. Management accounting involves budget creation and the trend
character that managers use to decide how to allocate money and resources to generate
expected revenue growth (Schuster, 2021).

 Profit ratio analysis

Determining the rate of return is a must before embarking on a project that requires a lot of
investment. Key questions can be answered through management accounting to develop a
business's profitability and come up with a financial strategy to give a business the most
profitable opportunity (Schuster, 2021).

b. Roles of management accounting

According to Marc J, 2012 Management accounting has the following four main roles

 Provide information to managers for planning and decision making.

A managerial primary role is to formulate a plan to meet the company's goals and goals.
Planning requires people in a managerial role to continually check on the team's progress to
make small adjustments as needed. Much of a person's planning function includes working
independently to determine what responsibilities must be assigned to which employees,
prioritize certain tasks, and create timelines.

 Assist managers in operating and controlling the organization's operations.

Along with the planning, a manager's organizational skills can help ensure the company or
departmental unit is running smoothly. From establishing internal processes and structures to
knowing which employees or groups are best suited for specific tasks, keeping everyone and
everything organized throughout day-to-day operations are important functions. management
importance.

 Motivating managers to achieve organizational goals.

Managers should feel comfortable and confident in directing the day-to-day tasks of their team
members as well as during times of change or challenge. Leadership can manifest in a number
of ways, including recognizing when employees need reinforcement and being commended for
dealing fairly and decisively among team members.
  Measure the performance of managers and departments, units attached to the
organization.

Control (and quality control) in management is making sure the end goals of the business are
being met, as well as making any necessary changes when they are not achieved. To ensure the
best functioning functions, managers must keep track of all employees' performance as well as
the quality of work and projects completed.

c. Management Accounting Report.

Financial statement is a form of providing information related to the financial performance of

an enterprise, such as: assets, debt, equity, revenue, profit, flow. Below are the most used
types of financial statements.

Budget Reports

A budget summary is a comparison of a company's real performance against a pre-determined

budget. This letter is submitted to someone in possession of a line item on the income
statement, which is typically the department heads. The budget summary is used to assess
which spending amounts are unsustainable, so that steps can be done to minimize expenses to
the amount budgeted. This article is one of the most often used instruments for keeping track
of a company's financial statements (Dalkin, 2010).

Job costing reports

Job costing reports are monitoring instruments that are used to compare a project's or a
production's output to a defined or expected benchmark. They're seen in a variety of
industries and business sectors. The main goal of work costing analyses is to find
inconsistencies or positive outcomes, which are normally expressed in financial terms. They
can be used to record financial as well as numerical performance results.

Work costing reports, contrary to common opinion, are personalized reports that are informed
by the intent and industry norms. This article explains what work costing reports are, how they
are made, and how to use them. My aim is for the reader to enjoy work costing reviews and to
continue reading this collection (Dalkin, 2010).

Inventory and manufacturing report

 Inventory report

An inventory estimate summarizes how much inventory a company has at any given time. The
inventory report is a tangible or electronic document that contains numbers that indicate a
commodity that is currently usable, inventory that is in good standing, or inventory that is
required for internal use. a company (Lopienski, 2020).

A successful inventory report provides up-to-date statistics with a high degree of accuracy, as
well as graphic photos that display how much of each item you have in stock. When consumers
purchase goods online, inventory reports can help you prevent overordering or running out of
stock (Lopienski, 2020).

 Manufacturing report

Manufacturing report is a detailed report on the cost incurred in the workshop and the
completion results to provide information for the management level from which to make
appropriate decisions. The production report essentially describes the production activities
aimed at assessing the responsibilities of the workshop foreman or production team leader.

Typically each workshop must prepare a detailed production cost, finished product, and work-
in-progress report to provide higher management with a sense of the cost situation of their
facility. The production report serves as job cost sheets in aggregating production costs and
calculating product costs. From the above information, the managers know the production
results of the entire enterprise to have a basis for making production and consumption
decisions with an appropriate level of output. It is a key document of the methods of
determining the cost of work and production processes, and is important for the business
administrator to control costs and evaluate the production performance of each (Dalkin, 2010).

A performance report.

A performance report is a routine report by government departments, funded by wages, on the

performance of a mechanism or their performance, required to show that the money was
expended adequately and effectively. Performance metrics that assess the organization's and
programs' performance will be used in those studies. The report could, for example, indicate
the number of arrests, convictions by criminal category, and the improvement in crime rate for
the police force (Moore, 2009).

d. Financial Accounting

Financial accounting not only systematically records all transactions of a business, it also
provides information to the owner or manager of the company about the current financial
status of the company. strong or weak. This is very important for future business decision
making through the product of financial accounting is financial statements. It is material that
provides financial information to all interested parties, either publicly or privately.

Financial accounting has two specific responsibilities:

Information responsibility: It is the job of collecting, receiving and processing accounting

information according to accounting operations and providing information to interested
departments. Through the product of financial statements, the value of the main indicators in
the course of business operations of the business is reflected in detail and details.

Inspection responsibility: Financial accounting helps businesses check and supervise financial
revenues and expenditures and collection and payment of debts. At the same time, it is the
inspection of the management and use of assets and sources of assets, detecting and
minimizing financial violations of assets.
3. Management Accounting Systems

a. Definition
Internal management accounting systems are used to provide management with essential
details for organizational company decision-making. These systems could be used by a
production firm to aid in the costing and management of their operation. A hospital can use
management accounting systems to help with insurance billing and other internal needs
(Jukka, 1997).

These programs differ according to the sectors in which they are used, and provide for
industry-specific functionalities and reports.

b. Different of Cost Accounting, Inventory Management, Job-Costing

Cost Accounting Cost accounting is an accountant position that takes on income work,
recording and classifying all expenses related to the completion of a
business goal. Cost accounting plays an important role in streamlining
production processes to reduce costs for businesses and bring higher
profits for individual product sales (Lalitha, 2011).
In Cost Accounting System has two most common types of costing
systems are:
Job order costing
It is a costing approach that's used to work out how much each
commodity costs to produce. This system of costing is commonly used
where a company manufactures a number of goods that are distinct
from one another and has to quantify the cost of doing a single task
(Lalitha, 2011).
Process costing
It is an accounting tool for tracking and accumulating direct costs in a
production operation, as well as allocating indirect costs. Process costing
is normally a big part of the book. It is a system of allocating costs to
manufacturing units in industries that produce vast volumes of similar
goods (Lalitha, 2011).
Inventory Inventory management is a planning method for determining when to
Management place an order and how much to order so that the cost of ordering and
the storage costs can be optimally effective without causing production
loss. discontinuity.
Inventory management has two contradictory issues: ensuring
continuous, uninterrupted production that satisfies customer needs, it is
necessary to keep a large inventory of inventory, but if stockpiling such a
large amount of inventory leads to higher costs of managing it (Inventory
management, 2005).
Perpetual inventory system
A perpetual inventory system is an inventory control process that uses
computers to monitor real-time purchases of obtained or sold stock. It is
 usually known to be more effective than a periodic inventory system.
Periodic inventory system.
The periodic inventory scheme is a type of inventory valuation for
financial reporting purposes in which inventory is physically counted at
predetermined intervals. To measure the cost of products sold, this
accounting system takes inventory at the outset of a year, applies new
inventory acquisitions during the year, and subtracts ending inventory
(Kenton, 2019).
Job-Costing Employment costing is a costing approach used where work is done to
satisfy the particular demands of consumers and each order is of a
reasonably limited length. As a result, work costing is the most
appropriate costing approach for a company that provides products
based on consumer orders (Lucey, 2009).
Material
The task expense method should be able to keep track of the costs of
products required or refused during job execution. Via manual recording
of goods on price sheets or details that can be billed using online
terminals in the warehouse and manufacturing field, the device can
aggregate these costs. exporting If any surplus goods are returned to the
factory, the cost of those materials is removed from the job and they are
returned to the warehouse (Lucey, 2009).
Labor.
The labor costs used by a worker must be tracked by the job cost system.
Direct labor will pay the majority of the expense of a service-related
work. Direct labor is normally allocated to a job through a time card
(using a stopwatch), a timesheet (where hours are manually recorded),
or a computer-based time clock app (Lucey, 2009).
Overhead.
Overhead costs (such as depreciation on manufacturing facilities and
building rent) are allocated to one or more expense pools by the work
costing system.
The cumulative balance of each expense pool is allocated to the different
available positions at the end of each accounting cycle based on a
consistent distribution process (Lucey, 2009).
Price Price optimization systems are mathematical programs that compute
optimization how demand changes at different prices, then combine that data with
system cost and inventory level information to suggest what price will be
improve profitability (Storn, 2006).

A price taker is a business member who is unable to dictate market

costs. As a result, a price taker must consider the current selling price. A
price taker would not have the monopoly leverage to control the value of
products or services (Storn, 2006).
 A price setter is an entity that can set its own prices when its goods are
sufficiently different from rivals. When a company has a sizable market
share and a well-defined pricing policy, it is best able to fix rates (Storn,
2006).

4. financial governance
a. Definition

Financial management is the management of economic relationships arising in the process of

forming, developing and transforming capital in related forms.

Ensuring the enterprise always has the necessary amount of capital, the structure in accordance
with the requirements of the business process, contributing to bring the highest business
efficiency for the business and benefits for the capital suppliers. Importance of ethical and
responsible financial governance to business (Carl S, n.d).

Good financial governance ensures financial data is correct. When organizations place controls
on financial data, can be sure finance teams are using the correct version of data to complete
reports, budgets, plans and other financial documents.

b. Importance for the business

Financial governance is key to generating regulatory and compliance disclosure reports.
Financial governance includes the ability to stay up to date with compliance requirements, such
as IFRS and GAAP updates. Good financial governance means the company is collecting,
calculating and presenting financial data according to regulatory rules.

Thanks to sound financial governance, more accurate budgets, plans, models, and forecasts
that executives use to formulate strategies and dictate directions based on a firmer sense of
reality business finance. The Finance Office can work to complete financial processes faster and
with more confidence. As admins can see where contributors are in the process, there will be
less bottlenecks and missed deadlines.

When performance management software automatically imports and validates the data, the
finance department do not have to worry about manually entering the data or checking in
double, triple, or quadruple. Financial governance means being able to see the entire life cycle
of data and where it comes from. It answers questions like "Who did what, when" and "Who
was responsible for this report and this number." Financial governance allows organizations to
identify risks faster than information that signals business risk.

5. Identifying the financial problems

Through experience, business owners and executives naturally become in tune

with the peaks and flows of the economy. However, when the livelihoods of your
workers and your family are threatened, it is too big a risk to rely entirely on your
 gut instincts.
Economy cycles In the process of economic expansion, factors such as employment, production
and sales will show obvious signs of growth. In contrast, the economic slowdown
is indicated by rising unemployment, slow growth and stagnant prices (Vance,
2003).
Although the business may not directly supply key players in the economy - such
as mining resources - a shaky economic prediction or vine rumor could be quick
and impossible to resolve enjoy sales from business.
Legal challenges Legal challenges are a financial challenge for companies today. Litigation, in
particular, is one of the most dangerous threats a business can face. Even if you
do nothing wrong, a business can be easily sued by another party. For this
reason, it is important to protect the business from lawsuits as much as possible.
In addition, a company should carefully consider tax issues when doing business
to avoid penalties and financial harm (Vance, 2003).
Financial planning With any business, capital is considered the blood stream to support life. When
starting a business, many businesses are very excited about long-term financial
plans. They often start pouring money into factories, long-term office rentals,
machinery and equipment. When starting operations, many businesses choose to
take advantage of available resources such as borrowing relatives' homes for
production, offices, or the business owners themselves to deliver goods (Vance,
2003).
These costs are often overlooked by business owners when calculating product
prices, leading to inaccurate calculation of product selling prices and profits.
Therefore, when expanding investment, product costs cannot offset costs,
leading to ineffective business and negative capital (Vance, 2003).
When there is a shortage of capital, many businesses find ways to raise capital for
their businesses and send plans to investors they know. This will make it difficult
to find enthusiastic investors and reveal the financial plan of the business and
bankruptcy.

6. Personal traits and skills of management accountant

An accountant requires many skills and traits to succeed. It is not only about job level but also
about soft skills. Here are some of the top accounting qualities.

 A Strong Sense Of Ethics

Although accountants need to master the basics, they must also show an interest in updating.
With the advent of new principles, laws and taxes, the accounting field is always changing.
Accountants must ensure that they have a thorough understanding of the latest news and
developments in their field. Today, technology is playing a bigger role in the industry and
accountants must be aware of these emerging trends. An accountant who does not continue to
study will no longer be an asset to an organization for a long time ( nuvest.net, 2017 )
  Emphasizing Accuracy

It is essential that accountants be accurate in their work. Misplaced digits or even commas can
lead to great financial risk for an organization. Thus, accountants must focus on details and pay
much attention to the accuracy of the job. Accountants must develop skills to test their work to
the extent that it is second nature to them (nuvest.net, 2017).

 ORGANIZATIONAL SKILLS

Accountants need to deal with a lot of paperwork, number and data on a daily basis. To remain
on top of all these details and access the right information in an efficient manner, they must
exhibit excellent organization skills (nuvest.net, 2017).

 SENSE OF ACCOUNTABILITYA

A good quality of an accountant is to accept the result and any fallout of their work.
Accountants must own up to their mistakes and ensure that they are not repeated. Mistakes
can happen to even the most diligent person. Accountants should, however, be taking steps to
prevent inaccuracies (nuvest.net, 2017).

 Working In Group

Accounting and bookkeeping requires a team effort. An accountant must be able to work with a
team in delivering the work required. They must be comfortable meeting with clients directly
and coordinating tasks with the rest of the team including senior stakeholders. Accountants
must know how to work together to reach the organization’s goals (nuvest.net, 2017).

 KNOWLEDGE OF THE FIELD

Accountants are necessary in a diverse array of fields and industries. While the basic tasks
remain the same, additional requirements and functions might be expected of the accountant
in specific fields. As such, the accountant must have a thorough grasp of the industry and niche
of the client’s business. Understanding the requirements, goals and the way the business is
being run is vital to determining the right way to proceed with the accounting (nuvest.net,
2017).

• TRUSTWORTHINESS AND RELIABILITY

One of the most important qualities of a good accountant, trustworthiness, is a valued asset in
this field. Accountants deal with the financial health and condition of an organization, a
confidential topic. The accountant must have the integrity and reliability to ensure confidential
data remains secure (nuvest.net, 2017).

Conclusion
In short, a business that wants to succeed must rely on good financial management to help
make good plans for the capital that the company currently has or internal financial control and
money related issues. The law helps companies keep getting upgraded and moving up.
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