1 HI5017 Managerial Accounting Trimester 2 2018 Individual Assignment Assessment Value: 30% General Instructions: 1. This assignment is to be submitted in accordance with assessment policy stated in...

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WORDS – 3000
REFERENCING - HARVARD
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1. EXECUTIVE SUMMARY:
    This is a report on the management accounting tools. There were three options on the choice of management tools: Activity based costing, budgeting, standard costing. For this report, budgeting has been chosen. At first a brief introduction has been given on management, management accounting and several management accounting tools. Then the discussion has been made on budgeting. At first the meaning of the budgeting has been explained briefly. Then the literature review on budgeting has been done that is what the research scholars are thinking and telling on budgeting.
Then two research articles has been chosen on budgeting of organization, those have been fully analyzed, the purpose of those researches, what are they trying to find out and the conclusions drawn by them has been discussed. Then the similarities and differences between the two chosen research articles have been discussed. Then the learning outcomes from those articles have been listed that is what the articles actually taught and the conclusions drawn by the articles is actually relevant in practical situations for the organization has been analyzed.
At the end, conclusions have been drawn based on the study for the purpose of this report and a few recommendations have been made.
Table of Contents
1. EXECUTIVE SUMMARY:    1
2. INTRODUCTION:    2
3. BUDGETING:    3
3.1. MEANING:     3
3.2 LITERATURE REVIEW:    4
3.3. FIRST RESEARCH ARTICLE AND ITS FINDINGS:    5
3.4 SECOND RESEARCH ARTICLE AND ITS FINDINGS:    7
3.5 SIMILARITY AND DIFFERENCE BETWEEN THE TWO RESEARCH ARTICLES:    9
3.6 LEARNING OUTCOMES:    10
3.7 PRACTICAL APPROACH OF LEARNINGS:    11
4. CONCLUSION:    12
5. RECOMMENDATION:    12
6. REFERENCES:    13
2. INTRODUCTION:
    Management is actually making the right strategy for an organization and coordinating the efforts of employees, using the available resources including technological, financial, natural, and human resources to achieve the objectives for the organization. Everything is done to achieve organizational goals, so setting the right organizational goals is also a part of the management (Hersey and Blanchard, 1969). There are mainly four functions of management: planning as to what are to be done to achieve the goals of the organization; organizing the resources to accomplish the plan; to lead the employees so that they work and coordinate to achieve the plan; controlling the whole process and keeping a check on the progress of the formed plan. There are several departments in an organization and each department has to manage themselves. So, professional managers are assigned to each department in an organization. Moreover, there is a top management team to manage the whole organization.
    Management accounting is use of financial data of the organization by managers to get the accounting information of the organization so that they can take the right decision for the organization. Management accounting also helps to understand the economic and organizational theories for better decision making (Zimmerman and Yahya-Zadeh, 2011). Strategic management accounting actually helps to understand the performance of the company and if it is operating at the optimum level so that the decisions can be taken accordingly (Cadez and Guilding, 2008).
    There are several tools used for management accounting so that the whole situation of the company can be understood in order to take the decisions. The tools are: SWOT analysis, PESTEL analysis, cash forecasting, mission and vision statement, budgeting, Porter’s five force model, activity based costing, etc. For this report the discussions has been limited only on one management accounting tool that is budgeting.
3. BUDGETING:
3.1. MEANING:
    Budgeting is actually relocating the resources of the company including financial, technological and human resource among various departments and projects for a certain period of time so that the objectives and goals of the organization can be achieved. Actually the main aim of budgeting is to allocate resources based on the benefits derived which means more resources will be allocated to that department or project which will help to earn more profit. There are different types of budgeting: master budgeting, cash budgeting, financial budgeting, capital expenditure budgeting, program budgeting, operating budgeting, supplementary budget, target budget, add on budget, rolling budget, etc.
The budgeting helps to understand the whole resources available with the company, keep focused on achieving the objective and goals of the company, it also make aware what is actually going on with the resources and what is the best way to utilize them. The spending and savings can be well organized with budgeting; savings can be actually planned for expected as well as unexpected costs. If the company is about to fall short of any resource or it is going to be bankrupted then budgeting actually helps to identify these potential threats much before than the actual occurrence.
3.2 LITERATURE REVIEW:
    Every organization has to make their own budget irrespective of being private or public or government (Rubin, 2016). Government actually implements same kind of budget for all its companies so that a universal standard is maintained (Lee Jr, Johnson and Joyce, 2012). This is a good theory so that equality can be maintained. One type of budgeting is capital budgeting, which help to ascertain the risk of the company, make the manager less conservative and try to take risk aversion measures (Gervais, Heaton and Odean, 2011). Capital budgeting is a combination of both science and the economy to achieve the right decision (Miller and O’leary, 2007).
Performance budget is also very important to ascertain the performance of the organization that is if the company is operating at its optimizing level (Kelly and Rivenbark, 2014). Measuring the performance of the company is very important since if the company doesn’t perform properly, then it will not earn enough profit and will not be able to survive in the long run. Performance audit and accrual audit are two important tool to analyze the company’s situation which is far better than the conventional methods (Schick, 2007).
Continuous budget is also important for the companies to keep the control in the hand and constantly watching the activity of the company (Frow, Marginson and Ogden, 2010). Making budget once in a year is not much helpful and continuous budget that is making budget weekly or at least monthly is...