ACCOUNTING Essay Example | Topics and Well Written Essays - 2250 words

ACCOUNTING - Essay Example He successfully included all the expenses and related each with one or more cost centers. The report will concentrate on providing a thorough investigation based on the seven vital issues that have been given. 1. Management accounting system does not necessarily relate to a whole new form of accounting system but it concentrates more on providing valuable information to enhance the effectiveness and efficiency of the business. (Johnson, Kaplan, 1991, p.4). It can be regarded as an extension given to the concept of cost accounting which helps in giving more economic information to the management helping them in decision making, policy formation, detect the major flaws on the business etc. According to the Anglo-American Council Management Accounting is defined as â€Å"the presentation of accounting information in such a way as to assist management to the certain policy and the day to day operation of an undertaking.† From the definition it is being understood that the financial data is basically processed and analyzed in a manner that the management can run business operation more systematically. Apart from business planning and policy formulation there are other certain objectives of this system. This system essentially is being used as a process of interpretation. Unlike cost accountancy it does not always identifies the cost element of the business but it is more dynamic in nature as it analyzes the data and reveals the vital information like where in the company is doing bad or good in its operational processes.( Johnson, Kaplan, 1991, p.4). These identifications in turn help in the decision making of any organization. In this case, the company Thomela though was making profits up to a certain level; there were difficulties in their activities and production, which were exposed when the market collapsed. Thus with the installation of the management accounting system,