Answer To: 1 HI5017 Managerial Accounting Trimester XXXXXXXXXXIndividual Assignment Assessment Value: 30%...
Soumi answered on Sep 29 2020
Running Head: MANAGERIAL ACCOUNTING 1
MANAGERIAL ACCOUNTING 16
HI5017 MANAGERIAL ACCOUNTING TRIMESTER 2 2018 INDIVIDUAL ASSIGNMENT
NAME: ____________________
STUDENT NUMBER: _______________________
Table of Contents
Executive Summary 3
Introduction 4
Using of Budgeting as the Management Accounting Tool by Organisations 4
a. Explaining Budgeting 4
b. Purpose of the Researches in Chosen Articles and their Research Questions to Explore 6
c. Similarities and Dissimilarities of the Findings in Chosen Articles 9
d. Four Specific Lessons or Outcomes generated from Findings of the Two Researches Useful for Australian Firms’ Management Accountants, with Justification 11
Conclusion 12
List of References 14
Executive Summary
This assignment deals with the articles related to evolution of budgeting and the use of budgeting. The assignment ensures that an in-depth knowledge of budgeting is received; by the student and ensures that the process of evolution of budgeting is crisp and clear. The purpose of the articles has been explained in the initial part of the assignment. The similarities and differences in the opinion of the author follow it. An attempt has been made to identify the outcomes of the articles and ensure that the manager is able to use in the practical scenario.
Introduction
In the modern world, management accounting plays an integral role in taking key decisions. Reports prepared by using various techniques of management accounting helps in taking timely information. Budgeting can be said to be a plan to spend some money in future. The plan that is prepared to spend the money can be said to be a budget. Since decades, this management accounting technique is being widely used by organisation to plan their activities. This assignment deals with the study of articles relating to budgeting. Two articles have been chosen from different journals to have a comprehensive understanding of the topic. The articles deal with different real-life scenarios that vividly explain the importance of budgeting in different situations. The learnings from the study will be clearly explained in the assignment. The similarities and difference in the studies helps in understanding the topic comprehensively.
Using of Budgeting as the Management Accounting Tool by Organisations
a. Explaining Budgeting
Budgeting is a process of creation of a plan to spend money. The plan may be for personal purpose or official purpose. According to the opinion of Anessi-Pessina, Barbera, Sicilia and Steccolini (2016), managers across the globe need to spend money for various activities. A pre-defined budget helps in efficient utilisation of funds for specified purposes. It ensures the availability of fund for the most important purposes. However, in the past it has been observed that certain amendments are required in the budget at the very last moment. In spite of that, it helps in planned spending of the funds. There are various types of budgets such as capital budgets, flexible budgets, sales budgets and others. According to Weber et al. (2015), organisations across the globe use variety of budgets as per the demands of the situations.
Budgets are also required to be prepared wherever there is a need to spend. They are prepared both at national and international level. Government prepare budget to ensure judicious use of the limited funds. As per the views of Larsen, Ussing, Brunoe and Lindhard (2015), budgeting also helps in deciding the source of raising funds. Budgets that involve huge fund are less flexible in comparison to budgets that related to low volume of funds.
Budgets relating to low funds can be changed as per the demands of the situation.
However, budgets dealing with high amount of funds cannot be changed easily. Organisations prepare a number of budgets such as employee budget, purchase budget, employee budget and others. This helps the firm in tracking the area of wastage of resources and tracking the area of efficient usage of resources. As per the views of Jeffrey and Cristina (2016), the master budget is a combination of all the individual budgets. Individual budgets deal with details of expenses at departmental level. On the other hand, mater budget deals with spending of funds at organisational level. There can be number of individual or sectorial budget, but there is only one master budget.
Budgeting helps is comparison of actual results with the required results. The variances can be analysed and necessary actions can be taken in response to that. A well-defined budget helps in communicating the objectives of the organisation. If an organisation is involved in capital spending, it means capacity increment or similar indications. According to Bonica (2015), the requirement of various resources like work force and others can be easily predicted. Thus, necessary arrangement can be made for the same. In case of a budget, it is important to review it at regular intervals. This helps in modifying the budgets as per the demands of the situation.
There may be certain situation like inflation, depression, shortage and other issues that can have an impact on the future expenses or revenue. As per the opinion of Aksom (2017), budgets are always prepared to meet the requirement of the future. Past budgets are analysed and the deviation are accounted so that the new budget can be prepared accurately. Managers across the globe used budgeting technique to keep a control on the expenses. They prepare flexible budgets to ensure that if there is any abrupt chance in market condition, the same can be accounted for.
Budgets play an integral role in the process of strategic planning. They provide the road map for the expense to be incurred in the future. According to the opinion of Nwankpa and Okeke (2017), managers should have the capability to analyse the situation and modify the budgets as per the requirement s of the situation. If the budget is not revised, then it may lead to under-utilisation of the funds.
b. Purpose of the Researches in Chosen Articles and their Research Questions to Explore
In the article Joseph and George (2011), the authors have identified that the changes in the market condition and an ineffective budget can have a significant impact on the performance of the organisation. According to Danylevskaya-Zhugunisova (2016), lack of co-ordination among strategy and budgets can have a negative impact on the performance of the organisation. The authors in the article have discussed the integrated planning and controlling approach. The author has clearly disclosed the difference between strategy and budgeting. Strategy is framed after analysing the situation in depth. On the other hand, budgets are prepared initially and then adjustments are made as per the demands of the situation (Noguchi & Boyns, 2012).
The authors believe that the decrease in the planning cycle has led to an arousal of a number of issues while preparing strategies and budgets. According to the perspective of White and Menzel (2015), managers across the globe have less time to formulate strategies and...