Accounting For Decision Makers Assignment Answer

Accounting For Decision Makers

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Question 2: Various techniques in Management Accounting aid in decision-making

Two different techniques

Capital budgeting

The capital budgeting is the method by which the business undertakes for evaluating the potentiality of the project or the investment that is made. The construction of new things needs bigger investment which the project is required for capital budgeting and also gets rejected sometimes. The project will highlight the capital budgeting for 18 months which will determine the cash inflows as well as outflows by defining the potential listing for sufficient target benchmark.

Marginal costing

Marginal costing is important method to identify marginal cost effectively. It helps the management of the company to make critical decisions at the time of resource allocation. Effective resource allocation supports in optimizing overall production of the company. Based on the proper resource allocation, business operation of the company has been optimized. This process assists the company to control different manufacturing cost by making proper budget plan. This costing practice is too common mainly in manufacturing industries. This costing also effective to those industries, wants to achieve high scale of economy.

Current economic developments to evaluate the contribution of the company

The current economic development searches all the gross national product GNP as well as the Gross Domestic Product GDP can access the economic growth. it measures the value of the services and goods that are provided by the nation.

Key accounting concepts and principles

The accounting standards are implemented and are used for improving the quality of the information that is collected by the company. states that it is required for a publicly traded company which maintains the IFRS (Wennekers et al, 2021). Moreover, it shows the ability of the financial statement to measure the multiple companies review. The counting principles are accrual principle, cost principle and also the Going Concern principle.

The process involved in producing financial reports

The accounting cycle follows the process of making accounting principles of the business activities by analysing the performance of the company. it shows that with comprehensive performance that analyses the organisation. The accounting cycle identifies the transaction that needs to be properly recorded for maintaining the books of accounts (Fridson and Alvarez, 2021). The second state is for creating the journal and the maintenance of the transaction that helps in combining the data and maintaining all expenses. The third is the posting of health in the general entries That provide activities of accounting by monitoring all the financial positions.

Interpreting and analysing the financial reports

Capital budgeting

Budgeting
Particulars	Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12	Month 13	Month 14	Month 15	Month 16	Month 17	Month 18	Total
Revenues
Sales	30000	30000	30000	30000	30000	30000	31500	33075	34728.75	36465.1875	38288.44688	40202.8692	30000	32175	33113	31512	29494	22756	573310.2536
Income from Promotions											5000	5000							10000
Total Revenues	30000	30000	30000	30000	30000	30000	31500	31500	31500	31500	31500	31500	31200	30000	31000	31500	30000	31400	583310.2536
Expenses
General and Administrative	5000	5000	5000	5000	5000	5000	5000	5000	5000	5000	5000	5000	6000	5000	3000	6000	5000	6000	91000
Rent	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	3000	36000
Salaries	6000	6000	6000	6000	6000	6000	6000	6600	6600	6600	6600	6600	5500	8400	7100	5510	5150	4120	110780
Advertising and Marketing	2800	2800	2800	2800	2800	2800	2800	2800	2800	2800	2800	2800	3000	3000	3000	3000	3000	3000	36600
Other Miscelleneous	2000	2000	2000	2000	2000	2000	2000	2000	2000	2000	2000	2000	1000	2000	2000	2000	2500	2500	36000
Total Expenses	18800	18800	18800	18800	18800	18800	18800	19400	19400	19400	19400	19400	18500	21400	18100	19510	18650	18620	310380
Profits	11200	11200	11200	11200	11200	11200	12700	12100	12100	12100	12100	12100	12700	8600	12900	11990	11350	12780	272930

Table 1: Capital budgeting

Marginal analysis and forecasting

Horizontal analysis

All figures in CAD Millions
Assets	Amount 2021	Amount 2020	Absolute Change (2021-2020)	Percentage of Absolute Change (Absolute Change/ 2020)*100
Non-Current Assets
Property, Plant and Equipment	6775.2	6684.8	90.4	1.35%
Goodwill	391.8	396.4	-4.6	-1.16%
Investments in Associates	0	34.3	-34.3	-100.00%
Deferred Tax Assets	96.2	98.1	-1.9	-1.94%
Other Financial Assets	284	291.3	-7.3	-2.51%
Total Non-Current Assets	7547.2	7504.9	42.3	0.56%
Current Assets
Cash and Cash Equivalents	525	651.2	-126.2	-19.38%
Trade Receivables	3	4.2	-1.2	-28.57%
Inventories	167.2	152.1	15.1	9.93%
Other Financial Assets	27	14.3	12.7	88.81%
Other Assets	113.3	96.1	17.2	17.90%
Total Current Assets	835.5	917.9	-82.4	-8.98%
Total Assets	8382.7	8422.8	-40.1	-0.48%
Liabilities
Current Liabilities
Trade Payables	274.7	240.4	34.3	14.27%
Income Tax Payable	37.4	45	-7.6	-16.89%
Other Financial Liabilities	76	78.8	-2.8	-3.55%
Other Provisions	57.7	77.6	-19.9	-25.64%
Total Current Liabilities	445.8	441.8	4	0.91%
Long-Term Liabilities
Long-term Debt	772.8	993.8	-221	-22.24%
Rehab Provision	352.9	363.5	-10.6	-2.92%
Deferred Tax Liabilities	1364.2	1229.1	135.1	10.99%
Other Financial Liabilities	121.9	109.7	12.2	11.12%
Other Provisions	121.9	112.6	9.3	8.26%
Total Liabilities	3179.5	3250.5	-71	-2.18%
Equity
Share Capital	7689.9	7648.9	41	0.54%
Suplus	24.9	22.7	2.2	9.69%
Accumulated Income	-22.4	-6.5	-15.9	244.62%
Deficit	-3296.5	-3318.8	22.3	-0.67%
Non-Controlling Interests	807.3	826	-18.7	-2.26%
Total Equity	5203.2	5172.3	30.9	0.60%
Total Equity and Liabilities	8382.7	8422.8	-40.1	-0.48%

Table 2: Horizontal analysis

Vertical Analysis

Assets	Amount 2021	Amount 2020	Vertical (2021)	Vertical (2020)
Non-Current Assets
Property, Plant and Equipment	6775.2	6684.8	80.82%	79.37%
Goodwill	391.8	396.4	4.67%	4.71%
Investments in Associates	0	34.3	0.00%	0.41%
Deferred Tax Assets	96.2	98.1	1.15%	1.16%
Other Financial Assets	284	291.3	3.39%	3.46%
Total Non-Current Assets	7547.2	7504.9	90.03%	89.10%
Current Assets
Cash and Cash Equivalents	525	651.2	6.26%	7.73%
Trade Receivables	3	4.2	0.04%	0.05%
Inventories	167.2	152.1	1.99%	1.81%
Other Financial Assets	27	14.3	0.32%	0.17%
Other Assets	113.3	96.1	1.35%	1.14%
Total Current Assets	835.5	917.9	9.97%	10.90%
Total Assets	8382.7	8422.8	100.00%	100.00%
Liabilities
Current Liabilities
Trade Payables	274.7	240.4	3.28%	2.85%
Income Tax Payable	37.4	45	0.45%	0.53%
Other Financial Liabilities	76	78.8	0.91%	0.94%
Other Provisions	57.7	77.6	0.69%	0.92%
Total Current Liabilities	445.8	441.8	5.32%	5.25%
Long-Term Liabilities
Long-term Debt	772.8	993.8	9.22%	11.80%
Rehab Provision	352.9	363.5	4.21%	4.32%
Deferred Tax Liabilities	1364.2	1229.1	16.27%	14.59%
Other Financial Liabilities	121.9	109.7	1.45%	1.30%
Other Provisions	121.9	112.6	1.45%	1.34%
Total Liabilities	3179.5	3250.5	37.93%	38.59%
Equity
Share Capital	7689.9	7648.9	91.74%	90.81%
Suplus	24.9	22.7	0.30%	0.27%
Accumulated Income	-22.4	-6.5	-0.27%	-0.08%
Deficit	-3296.5	-3318.8	-39.33%	-39.40%
Non-Controlling Interests	807.3	826	9.63%	9.81%
Total Equity	5203.2	5172.3	62.07%	61.41%
Total Equity and Liabilities	8382.7	8422.8	100.00%	100.00%

Table 3: Vertical analysis

Explaining the nature of earnings management and its relevance to users

Earning management has the relevant impact on the business value. it shows the methods for employing the account techniques that improves the appearances of the organisation observation and initially. This basically enables the investigation for the effect of earning management that uses the short-term accruals versus the long-term accruals. The management has the long-term accrual seat that has a greater impact on the relevance of earnings and issues the short-term discretionary accruals. The purpose of earnings can be explained that it demonstrates the reasonable quality of earnings that meets the expectation of the shareholder and also required for obtaining the authorisation from the regulator.

Need for regulation of financial reporting, including accounting standards

The aim of the regulation of financial reporting is to provide supervisors to collect all the relevant information about a financial institution. It also encourages it to collect the information about the capital as well as the liquidity position in the market for regulator the updating of reports. The regulation mandates team and definition statement health in reporting as well as auditing which discloses the financial statement for the invested in the public capital markets.

The problems faced by standards setters in an international context

The problem that is faced in the accounting standard is that it equates the accounting and also assumes the basis of enterprising the economy privately. It shows the political bargaining for standard settings that shows the standard setting process for non-political issues. counting shows the effect of human behaviour and also shows the financial score which is recorded. There are various problems that are implemented and also lacks in the training period that can respond in the wider business implication for transaction. It shows the vital information that requires a qualitative alternative for considering the IFRS transition implementation.

Key concepts and techniques in management accounting and control

The technique for managerial accounting is that the margin analysis is concerned with the implementation and the benefits of optimising all the production that needs essential techniques for managerial accounting. Capital budgeting is the second most important concept and technique that is important for collecting the information and requires necessary decisions for capital expenditure that help the manager in deciding the new capital budgeting decision.

Reference

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