Category: Managerial Accounting

Both types of accounting requite accuracy of information, but there is a different degree of data reliability in the two of them. Financial accounting requires much more accuracy than managerial accounting does. There are several reasons for the need for precision in financial accounting data.

The main cause for requiring accuracy in financial accounting is associated with the aim of such accounting. The reports on financial accounting are aimed to be analyzed by professionals or institutions from outside the organization in which they are prepared (Narayanaswamy, 2017). Therefore, it is of utmost importance to provide the most authentic data so as not to misguide anyone checking it. Another reason for the reliability of information in financial accounting is that usually, reports comprise data of a large period of time, which means that a small mistake or an inaccurate statement may undermine the dependability of the whole paper. Therefore, financial accounting is highly strict when it concerns the reliability of data used in the reports.

In managerial accounting, the demand for information reliability is not as high as it is in financial accounting. Managerial accounting is aimed at preparing reports not for external but for internal use (Warren, Reeve, & Duchac, 2016). These papers are necessary to build the future perspectives rather than analyze past achievements and losses. As a result, the major requirement for the data mentioned in such reports is their relevance rather than accuracy.

Therefore, it is necessary to keep in mind that both managerial and financial accounting presuppose accuracy, but they do not require it to the same extent. While in managerial accounting, the emphasis is put on data relevance, in financial accounting, the primary requirement to information is accuracy and reliability.

References

Narayanaswamy, R. (2017). Financial accounting: A managerial perspective (6th ed.). Delhi, India: PHI Learning Private Limited.

Warren, C. S., Reeve, J. M., & Duchac, J. E. (2016). Financial and managerial accounting (14th ed.). Boston, MA: Cengage Learning.

Variable Costing and a Sample Budget Review

Type of Budget

Seeing that the outcomes of the budget allocation have been delivered at multiple levels, it can be deemed as flexible (Edey, 2014).

Total Revenue per Student

By definition, the phenomenon of total revenue is determined as the product of the price per goods multiplied by the number of goods sold (Dima, 2013). In the case in point, to calculate the total revenue per student, one will have to add all revenues per student and divide the sum by the number of students in the identified group (see the table below).

Table 1. Total Revenue per Student.

It should be borne in mind, though, that the outcomes described above are the result of calculations made without the grants. Adding the latter to the total revenue, one will arrive at the following results: $6,688, $6,813, and $7,199 correspondingly.

Total Expenses per Student

As far as the total expenses per student are concerned, the formula is relatively basic. First, the total expenses must be calculated for each class. Afterward, the sums must be divided by the number of students in the class; as a result, the total expenses per student will be determined (Chen, Weikart, ‎& Williams, 2014). As the table below shows, $4,518, $5,283, and $7,646 are the figures that make up the approximate total expenses per student.

Table 2. Total Expenses per Student: Calculation.

When considering the reasonability for each expense reported one must admit that every single cost is completely justifiable from the perspective of students’ safety and educational needs. Therefore, all of the expenses listed seem necessary. Furthermore, it could be argued that the school budget could be expanded to allow more expenses so that the students could receive the necessary services of the finest quality (e.g., the costs for food reimbursement).

The school’s budget can be considered as viable. Indeed, a closer look at the table will show that the breakeven point for the school equals 66, as far as the number of students is concerned. While operating in the environment of the global economy is, by definition, a challenge due to the ever-changing factors affecting financial choices, the institution will likely survive in the competitive realm. A breakeven analysis will show at what point the organization will have to reconsider its budget and become more cautious in its financial choices.

In order to calculate the breakeven point, one follows the specified formula:

As the results of this calculation shows, the third scenario barely meets the requirements, hosting 66 students. Therefore, it will be necessary for the facility to reconsider the current approach toward attracting customers, so that more students can enroll. If this course is pursued, the threat of failing to retrieve the expected benefits and gain an adequate revenue by the end of the year will no longer be topical for the school.

General Benefits of Preparing the Budget

The positive implications of preparing the budget are quite obvious. First, the application of the subject matter helps the institution to avoid excessive costs that will ultimately lead to bankruptcy. When considering the budget in detail, one must admit that it serves perfectly to distinguish between fixed and variable costs. As a result, the organization becomes capable of reducing the latter, thus creating new financial opportunities and room for improvement in service (Livermore & Revesz, 2013).

In addition, the budget will shed some light on the means of improving the performance of the school’s departments. For instance, by evaluating the correlation between the expenses budgeted to sustain a particular department and the revenues that it has brought to the company, one will be able to locate any areas that are likely to be the cause of concern in the future and address the emergent issues successfully.

Finally, the analysis of variances becomes a possibility with the adoption of the identified technique. As a result, the opportunity will emerge for carrying out a vast statistical analysis of the performance that the school will have delivered by the end of the year. The analysis, in its turn, will point to any problems in the design of the current financial strategy, serving as the basis for the next improvement. Alternatively, it may direct the organization to the next area of development due to the change in external factors.

Determining the Control Function of a Budget

As stressed above, the budget serves as a tool for avoiding basic risks, including the threat of facing a rapid financial demise. By designing a budget, one can detect the areas that need further improvement, as well as outline the appropriate costs management framework that will help reduce the impact of negative factors. The statistical analysis will become the tool for determining the present-day tendencies in the school’s economic progress.

Therefore, the variance analysis has a direct relation to the quality management strategy used by the organization. Outlining the trends in the organization sheds light on the areas that may need improvement, helping to arrange the issues according to their priority. As a result, a significant improvement in performance rates can be expected, along with a huge drop in costs, together with waste reduction (Pyzdek & Keller, 2014).

The time that it takes to prepare the report, and the following datedness or date limitation of the information can be viewed as a disadvantage. However, in an environment that can be deemed as fairly stable, the specified issue is unlikely to pose any significant problems. Nevertheless, tools for enhancing the analysis need to be incorporated into the company’s design (Livermore & Revesz, 2013).

Alternatively, a forecasting analysis could be used to determine the course of the school’s performance. Allowing the company leader to identify a trend in entrepreneurship’s development, serves as the means of predicting the possible outcomes. However, a combination of the two tools can be considered the best solution. Setting the presuppositions for an all-embracing analysis, the tools in question will help lead the firm to a financial triumph.

Reference List

Chen, G. G., Weikart, L. A., ‎& Williams, D. W. (2014). Budget tools: Financial methods in the public sector. Thousand Oaks, CA: CQ Press.

Dima, I. C. (2013). Industrial production management in flexible manufacturing systems. New York, NY: IGI Global.

Edey, H. C. (2014). Business budgets and accounts (RLE accounting). New York, NY: Routledge.

Livermore, M., & Revesz, R. (2013). The globalization of cost-benefit analysis in environmental policy. New York, NY: OUP USA.

Pyzdek, T., & Keller, P. (2014). The Six Sigma handbook (4th ed.). New York, NY: McGraw-Hill.

Razetti, E. (2014). The executive’s guide to internal auditing. New York, NY: AuthorHouse.

Introduction

In today’s business world, very few people can measure up to the immense success that Sam Walton has made in his professional career. In spite of setting off his company from a rocky foundation, Sam Walton has been able to diligently manage the company, build it and expand its business tentacles to make it the distinguished multi million business empire it is today. In this paper, focus will be on highlighting some managerial accounting lessons that can be learnt from Sam Walton’s management. In doing so, scholarly journals, articles and books (especially the thirteenth edition of Managerial Accounting by Garrison, Noreen, and Brewer) will be used.

Background information on Sam Walton and Wal-Mart

Essentially, Wal-Mart is the trading name for Wal-Mart Stores Incorporated which is an American public multinational corporation established in 1962 and Incorporated in 1969 (Frontline, 2004). Wal-Mart mainly deals with large discount stores and warehouse all over the United States of America. Several Wal-Mart stores are also coming up in other regions like Europe, Asia and even Africa. Recent rankings by the famous Forbes 2000, positioned Wal-Mart as the 18^th largest public owned corporation in the world. Wal-Mart is also the largest global company as well as the largest private employer in the world—with over 2 million employees (Frontline, 2004)

This laudable success would have, however, not been possible had it not been for the ingenious management of Sam Walton and his business compatriots. Given below is a brief documentation of how Walton has been able to offer good leadership—despite the challenges he has faced—and lessons we can learn from him.

Main Discussion: Lessons from Sam Walton

The first lesson worth noting from Sam Walton’s business life is that, to succeed, we must begin by setting goals (both short-term and long-term) then working towards them constantly—depending on the nature of their urgency. To explicate this, Walton and Huey (1992, p.6-15) report of Walton’s difficult childhood and the several impediments that might have made him lose focus. However, being the determined person he is, he chose to persistently work towards his goals until he eventually succeeded. Additionally, Walton ensured that he interacted with several people including his schoolmates, his mentor, fellow workers, business associates and family who, in one way or another, helped him to focus circumspectly on his aims (p.10-30).

The second lesson from Sam Walton is that we should strategically plan for our actions, hope for the best while also expect and duly strategize on how to resuscitate ourselves from bad business scenarios. According to Garrison et al. (2009, p.34-38), the world of business is a highly dynamic arena which is influenced by several factors that can lead to success or failure. Consequently, we should always be ready for all sorts of outcomes. Walton, probably, learnt this lesson a long time ago and that is why he has been able to better Wal-Mart in spite of the several challenges faced—including: gender discrimination issues, unsatisfactory customer service and relatively high-priced good in some of its outlets (Little, 2010; Mallaby, 2005; & Frontline, 2004).

The third and last lesson that can be learnt from Wal-Mart’s management by Walton is that we should know our target market and ensure that we serve them adequately (Garrison et al., 2009, p.23-27). As glimpsed in the previous paragraph, there have been some complaints about Wal-Mart’s customer services. However, overalls, most macroeconomic analysts agree that, to a great extent, the company rightfully serves its clients. A good example is the renowned policy of selling products at good discounts. This enables the company to reach a wide range of audience thus eventually making huge profits. To support this, annual financial reports (between 2010 and 2011) indicate that the company made a whooping profit of $15.4 billion (after taxes and other deductions have been made) from annual revenue of $421.849 billion. This profit represented a 24.7 increase in the company’s gross profit. All these admirable figures simply emphasize the fact that Walton’s strategy in the company is truly working and is worth being copied or learnt (Wal-Mart’s Official Website, 2011).

Conclusion

It is undoubtedly clear that when we follow good managerial accounting practices; we are bound to eventually succeed. As is commonly said, the road to success can sometimes be long and we should be well-prepared. It should be duly noted that the lessons given above are just a few of the many strategies that can lead us to success. We should, therefore, endeavor in practicing them as we continually learn from other hallmarks of success such as Sam Walton.

References

Frontline. (2004). Is Wal-Mart good for America: the rise of Wal-Mart. Web.

Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2009). Managerial accounting (13^th Ed). New York: McGraw-Hill/Irwin.

Little, L. (2010). Mom bloggers question if Walmart lost its vision. Web.

Mallaby, S. (2005). Progressive Wal-Mart. Really? Web.

Walton, S., & Huey, J. (1992). Made in America: my story. New York: Doubleday.

Wal-Mart Website. (2011). Wal-Mart 2011 annual report. Web.

The process of management has always been one of the most challenging aspects of any enterprise growth and professional development. Hence, managerial accounting as a notion stands for accumulating, analyzing, interpreting, and reporting financial data to the managers for them to reorganize the workflow in the right direction (Jiambalvo). One of the major pitfalls in terms of the accounting process is the considerable impact businesses obtain from external factors like a crisis, social tendencies, and political environment. The global COVID-19 outbreak had become one of the most critical catalysts for businesses reorganization and concept reconsideration. As a result, managerial accountants have faced some severe issues, including:

• Problematic primary data collection. Since the outbreak genesis, businesses started full-scale online management, making it hard for the accountants to reach out to all the necessary departments;
• Price allocation. With an increasing number of people infected, the overall world economy cannot remain stable for one day, making it difficult to analyze the data in terms of the epidemiologic situation in both local and outsourced regions;
• Responses by a business. The COVID-19 outbreak has significantly changed the relationship patterns both in the B2B and B2C sectors, changing the basic price policy on the production of the services, respectively.

An ongoing worldwide pandemic has, by all means, changed the way people used to perceive business communication and agile economy frameworks. On the one hand, the issue that tackled the whole world regardless of status and affiliation has shown that people were born equal and deserved access to some fundamental services. On the other hand, however, the vast majority of the world community has lost considerable amounts of money due to the lockdown and workforce reduction. Hence, a primary ethical issue managerial accounting is to face in 2020 is socioeconomic inequity among both customers and businesses.

Work Cited

Jiambalvo, James. Managerial Accounting. John Wiley & Sons, 2019.

A contribution margin income statement format is the one in which all variable costs are deducted from the value of sales to obtain a contribution margin. All the fixed costs are then subtracted from the value of the contribution margin to obtain the value of the net profit or loss of the period. The traditional income statement applies the use of absorption methodology in its computations and formulation. In this format of traditional income statement approach, all fixed and variable costs of any given organization or business enterprise always constitute part of the inventory costs of that organization. The fixed and variable costs also collectively form part of the cost of commodities sold by the organization in question (Drury, 2007).

Traditional income statement format

In this format, the top section of it shows the detailed computation of gross profit of a business enterprise. The gross profit is computed as a summation, which includes net revenue earned by the company less the cost of goods sold by the business company. The next section of the traditional income statement shows the list of operating costs or expenses of the business. These operating costs or expenses are such as marketing, selling and distribution, rent and supplies among others. The net profit generated, or loss incurred by a business enterprise, simply refers to the statistical difference between the gross profit made by that company in question and total costs or expenses incurred by it in its operations.

Contribution margin income statement format

Contribution margin income statement separates the fixed and variable costs of the company in question. Variable costs of a business enterprise include costs such as variable production costs, for instance, the costs of acquiring raw materials and direct labor, and variable selling and administrative costs incurred by such organizations during their operations. The contribution margin refers to the difference between revenues earned by an organization and its variable costs. The last section lists the fixed production and overhead costs such as rent, depreciation and insurance. The net profit earned, or loss incurred by an organization simply refers to the difference between the contribution margin and the fixed costs (Garrison et al., 2003).

Question: Show your calculations when using a projected sales increase of 20%.

Question: Explain exactly why the contribution approach is more useful to project profits

The effect of fixed costs on profits is more emphasized in contribution approach than in the traditional approach; this is because the total fixed cost appears separately in the contribution margin approach rather than mixed with variable cost in the computation of the cost of goods sold and closing inventory (Lere, 2000).

Contribution margin approach allows for analysis of incremental effect of costs. It separates the fixed and variable costs hence giving a clear outline of measurement of the impact of increase of variable cost. Variable costs are controllable costs. That is these are costs that can be adjusted by management of an entity. Contribution margin approach by separating the variable and a fixed component of costs allows management to control the variable costs and this result to improved or higher contribution (Dubinsky & Ingram, 1984).

Contribution margin approach, as opposed to the traditional approach categorizes costs according to behavior; this can in turn helps management in the cost volume effect on profits of the entity in a given financial year. Using contribution approach the contribution margin per unit of the product is determinable which is useful in the decision making of a company. Managers find it much easier to understand the contribution margin because of clear separation of both variable and fixed elements of costs (Hopwood, 2009).

Question: Using the data, show how expected profits would be different if there were a sales increase of 10% and the CFO used variable COGS of 50% vs. 60%.

References

Drury, C. (2007). Management and cost accounting. Hampshire, United Kingdom: Cengage Learning EMEA.

Dubinsky, A.J., & Ingram, T.N. (1984). A portfolio approach to account profitability. Industrial Marketing Management, 13(1), 33-41.

Garrison, R.H., Noreen, E.W., & Brewer, P.C. (2003). Managerial accounting. New York, NY: McGraw-Hill/Irwin.

Hopwood, A.G. (2009). Accounting and the environment. Accounting, Organizations and Society, 34(3), 433-439.

Lere, J.C. (2000). Activity-based costing: a powerful tool for pricing. Journal of Business & Industrial Marketing, 15(1), 23-33.

Introduction

It is important to note that the given transfer price analysis showed a number of critical decision making points in favor of the proposed buying pattern. The analysis revealed that the benefits would primarily manifest themselves in terms of savings for divisions A and B. At the same time, Division C will still be able to supply half of the part needs for both A and B. The assessment mainly looked at the differentials between the current situation and proposal, where the calculations were made on the basis of changes in regards to internal and external purchases. The results of the analysis are that the proposal benefits monetarily both Divisions A and B.

Divisions A and B

The key advantage of the proposal affects Divisions A and B, which are estimated to save around $70000 and $40000, respectively. The difference is mainly the result of being able to purchase the essential parts at a larger volume and a lower price from external suppliers. It is possible to further increase the percentage of parts delivered by the external suppliers, which will inevitably lead to savings.

Division C

In the case of Division C, it is evident that the department will no longer produce as many parts as it is used to since the majority of demand shifter from internal suppliers to external ones. In other words, Division C will be able to focus on producing other parts besides 101 or 201, which means that there is an opportunity for innovation and new market interactions.

Recommendation

The core of the recommendation is to shift towards the proposal as soon as possible since there are major savings to be made. It is important to reduce the overall reliance of Divisions A and B on Division C because the latter does not offer an equivalent degree of flexibility as external competitors.

Best Regards,

Name____________________________

Short Essay

The given analysis essay will mainly focus on three different pricing strategies, which are cost plus a mark-up, fair market value, and price negotiated by the managers. These transfer pricing policies will be described, defined, and analyzed in regards to their strengths and weaknesses as pricing approaches since they vary in simplicity, flexibility, and variability.

Cost Plus a Mark-Up for The Selling Division

It is important to note that cost plus a mark-up pricing method is a measure of a price determined by adding costs and adding a specific mark-up to ensure profitability. The main strength of such a pricing approach is the fact that price will ensure profits and costs will be covered (Kurt Heisinger, 2016). In addition, it is highly simple to implement since only cost and mark-up considerations need to be made in order to derive the final price. The main weakness of such an approach is the fact that it ignores factors outside the production and costs. It does not factor in competitor prices and customers’ willingness to pay, which means that cost plus mark-up is blind to key market drivers. The pricing measures do not incentivize a manufacturer to reduce the manufacturing costs in order to decrease the price, which inevitably makes a division unable to compete with other more flexible suppliers.

Fair Market Value

Unlike the previously discussed pricing strategy, fair market value pricing primarily focuses on the general price values of a free open market for a specific product or service. In other words, a price is no longer tied to incurred costs and profit but rather on the market average for prices for equivalent products. The main strength of such a method is the fact that it factors in market trends and forces, which incentivizes manufacturers to be more competitive with external suppliers. However, the main weakness is rooted in the notion of having a free and open market, and since the case revolves around both closed and open markets, it might be difficult to determine whether fair market value pricing is plausible.

Price Negotiated by The Managers

The price negotiated by the managers relies on cooperation and collaboration as well as compromise, which are fairly difficult to achieve when it comes to determining to price for the divisions. The key strength of such a method is the fact that both parties can achieve satisfactory outcomes, and it ensures that the entire company is mostly independent of external suppliers giving it more autonomy. However, the main weakness is manifested in the fact that such a measure heavily relies on cooperativeness and collaboration, which might not always be achievable. Therefore, being unable to reach a point of agreement can result in more disruptions and resource consuming negotiations.

Pricing from Financial and Managerial Perspective

Transfer pricing is a significant issue from both managerial and financial perspectives because these two areas are interested in either profit or operational efficiency. In the case of financial management, being able to manufacture products are lower costs can mean that there are more profits. In regards to managerial aspects of pricing, it can lead to efficient growth of the manufacturing procedures by providing incentives or set up a stagnant production facility with no incentive for improvement. For example, cost plus a mark-up pricing might be plausible from a financial perspective, but it is a poor choice from a managerial one.

Conclusion

In conclusion, it is important to note that the proposal offers valid and sound direction for future decision making processes since all three pricing measures offer both strengths and weaknesses. Cost plus mark-up ensures profitability but does not factor in market forces, whereas fair market value makes a price competitive but can be flawed if the market of interest is not open and free. Lastly, the negotiated prices can be highly useful for both parties, but the lack of compromise and cooperativeness can hinder the decision making.

Reference

Kurt Heisinger. (2016). Managerial accounting 11.8: Transfer pricing between divisions[Video]. YouTube. Web.

The decision-making process in the company has a severe role in its further development and success. Thus, one of the tools that can help achieve the best results is the use of managerial accounting. This phenomenon implies procedures for obtaining and providing information about a company or organization. Examples of this activity within a business are the compilation of weekly budgeting. Thus, the use of managerial accounting can provide significant assistance in the process of making important decisions. This is because this activity helps to gain the most excellent understanding of the strengths and weaknesses of the company and assess its financial capabilities. Thus, these indicators can help in the process of solving any issue. Moreover, the opportunity to predict the future of the company and how specific actions can financially cripple the business is of particular value.

The next aspect that needs to be considered in this work is the study of financial accounting information. It that can be implemented to determine the health of the company as practical applications for calculating the Balance Sheet and Income Statement can be used (Tarver, 2021). Such a practice as cost management can also provide a lot of knowledge within the framework of the topic under study. This aspect measures the various costs associated with running a company. However, this approach is influenced by several circumstances at once, such factors as the level of production, inventory, and rent of a corporate office. Moreover, they can be included to determine the health of the company where I might like to work for in the future (Tarver, 2021). In addition, managerial accounting helps to significantly improve the decision-making process, which is necessary when ensuring the school’s finances.

Reference

Tarver, E. (2021). When is managerial accounting appropriate?. Investopedia. Web.

This presentation is devoted to an outline of a research project in the field of accounting, which is going to focus on managerial accounting tools that are used within the telecommunications sector in the UAE.

Background

The UAE telecommunications sector:

• is well-developed and rapidly expanding;
• has two major operators: Etisalat and du.

Modern accounting experiences:

• an increase in the amount of accounting data;
• a need for best methods and practices.

The telecommunications sector of the country has been rapidly developing in the past decades, and currently, it has two major operators: Etisalat and du. Nowadays, managerial accounting finds itself in a turbulent environment as the amount and scope of accounting data proceed to expand, which calls for the development of new methods and tools and the improvement of the currently employed ones. The proposed study is going to review this process from the point of view of the two major telecommunication operators of the UAE.

Managerial Accounting (MA)

• presupposes providing accounting information for managerial decisions;
• fosters strategic partnership between accountants and managers;
• creates value;
• aims to achieve companies’ objectives (e.g. profit maximization).

Before proceeding, it is necessary to review the concept of managerial accounting (MA) and its tools. MA can be defined as the production of accounting information that can facilitate managerial decisions. As a result, it is apparent that MA is strategic, helps to develop a meaningful partnership between management and accounting, and eventually creates value and helps a company to achieve its objectives. Thus, the significance of MA for a company’s strategic development is notable.

MA Tools

MA tools intend to:

• maximize profit;
• assist in planning;
• detect inefficiencies;
• distribute knowledge.

Used in the UAE:

• ABC: effective in analyzing costs and activities and assigning indirect costs.
• ABM: uses ABC data strategically.

MA tools are numerous, and their uses also vary, but they typically aim to maximize profit, distribute knowledge, define the issues and ineffectiveness at various levels of operations, and provide information that facilitates planning. A preliminary research allows determining two MA tools that are most often employed in the UAE companies: they are ABC and ABM. Neither of them can be regarded as a solution to every issue, but both are rather powerful and effective in their areas: ABC is especially useful in cost and activities analysis, and ABM is a helpful strategic tool. This information is going to be reviewed in the proposed study within the context of the UAE telecommunications sector.

Research Objectives and Hypotheses

Aim: determining preferred MA methods/tools in the UAE telecommunications sector.

Hypotheses:

• A positive correlation between the size of the company and the complexity of MA tools employed in it.
• Long-term MA tools are prioritized.

Thus, the aim of the proposed research consists of determining the most popular MA methods, tools, and approaches within the telecommunications sector of the UAE. Based on a preliminary literature review, it can be hypothesized that there is a correlation between the size of a company and the complexity of the tools that it employs; also, it is assumed that the companies of interest are likely to prioritize long-term planning and budgeting tools.

Methodology

Qualitative interviews (10-50 minutes): deep insights and understanding:

• 2 face-to-face;
• 8 phone interviews.

Sample: accounting managers of Etisalat and du; at least 5 years of experience.

Data analysis: categorization.

The methodology of the study is going to be qualitative because the insights and understanding produced by this approach are likely to be beneficial in achieving the aim of the study. In total, two face-to-face and eight phone in-depth interviews with open-ended questions are going to be carried out. The sample will consist of accounting managers of the two major telecommunication companies of the UAE. Only experienced employees will be interviewed, which means that the study will recruit only the managers with at least five years of experience. The data will be analyzed with the help of thematic analysis by categorizing the information.

Conclusion

Under-researched but important topic.

Expected results:

• characterizing the use of tools in the sector (limited?);
• specific tools;
• the most popular tools (ABC, ABM?);
• conclusions on the need for innovation.

The study is justified by the fact that the topics of the use of MA tools within the sector and in the UAE are rather underdeveloped, but they are critically important due to the significance of MA for the strategic development of a company. The expected outcomes include the conclusions on the patterns of the MA tool use within the sector. In particular, it is hoped to determine whether the use of the tools is satisfactory or not, which tools are used, and which tools can be regarded as the most popular ones. Since Etisalat and du are the only prominent companies in the UAE telecommunications sector, the findings of this study are likely to apply to the sector in general. Also, it is not unlikely that suggestions for innovation will be based on the analysis of the data. Thus, the study can have a theoretical and practical value for modern telecommunication companies of the UAE.

Traditionally, accounting is divided into two subsystems – financial and managerial accounting. This separation is due to the difference in goals and objectives, solved in the interests of external and internal users of information (Ashar, 2019). The managerial accounting system forms information necessary for internal analytical and control purposes; this information is not regulated by law. Management of the enterprise independently determines the management objects, accounting methods, and forms of reporting (Hilton & Platt, 2019).

Because management accounting is not regulated to the same extent as financial accounting, some ethical problems can occur. They are connected with the opportunity to hide some financial information or distort it. Management accounting activities are more difficult to control; therefore, it is almost impossible for an employer to monitor all of an accountant’s actions, and there is a high probability that some of those actions go against the interests of the company. Moreover, specialists might conceal or distort information about a company’s deteriorating performance. Therefore, specific requirements on reporting, such as a united accounting format and financial reporting, should exist to avoid data falsification and acting in one’s interests.

Another important ethical issue is competence, which an accountant needs to improve constantly. The legislation makes frequent changes in the financial sector. Without knowing them, the accountant risks committing illegal actions and leading the company to unfortunate consequences. In managerial accounting, it is important to express competence not only in the area of legislation but also in the area of highly specialized skills. Thus, in order to do their job more effectively, accountants need to keep up with technology and software developments in their industry. Organizational capacity and productivity rely on the precise order of actions, and therefore, there is a need for specific regulations which might facilitate better outcomes. All of the above ethical issues should be regulated by internal rules and reporting, as they significantly affect the company’s efficiency.

References

Ashar, K. (2019). Financial accounting essentials you always wanted to know (4th ed.). Vibrant Publishers.

Hilton, R., & Platt, D. (2019). Managerial accounting: Creating value in a dynamic business environment (12th ed.). McGraw-Hill Education.

There are two main branches of accounting. These are Financial Accounting and Managerial Accounting. The two types of accounting have a number of similarities and considerably numerous differences. The following paragraphs compare and contrast the two types of accounting using the subject-by-subject comparison structure.

Financial accounting refers to the type of accounting that deals with preparation of financial statements, using accounting techniques, for financial reporting. The main purpose of financial accounting is financial reporting which is a statutory requirement for companies. Thus companies must prepare financial account annually in order to satisfy the statutory requirement.

From this fact, it can be deduced that financial accounts are prepared for use by external parties who include the government, shareholders, etc. Due to the stated fact, financial accounts are subject to independent audits to ensure that the information presented in the accounts is true and fair. This is meant to protect the parties who use financial accounts from being deceived by misrepresentation of the accounts.

The practice of financial accounting utilizes historical data which is computed and reported to the concerned parties. Another very important aspect of financial accounting is the fact that financial accounting is governed by a regulatory body that ensures that standards are kept. The main concern by management regarding financial accounting is the possible inaccuracy of information in financial statements and the possible inadequacy of disclosure of financial information.

Financial accounting is instrumental in summarizing the efficiency and effectiveness of the whole business enterprise using a set of financial accounts. Both financial accounting and financial reporting use currencies, accounting techniques and accounting terminology to achieve their objectives.

Managerial accounting refers to the analysis of the information of an enterprise, using accounting techniques, for the purpose of planning on how to achieve the goals of an organization. It is thus apparent from this definition that results from managerial accounting are used within the organization and they are not meant for external use.

They are usually prepared for use by managers in making decisions. It can also be deduced from the definition that the primary purpose of managerial accounting is planning. Managerial accounts are not subject to audits since their preparation lacks motivations for manipulation. However, an organization may decide to audit its managerial accounts if it so desires. Management accounting does not deal with historical data alone but it analyses present current data or makes predictions of future data for effective future planning.

Contrary to the aforementioned requirement for financial statements to be prepared annually, management accounts do not have provisions for the time they should be prepared. An organization, therefore, prepares management accounts when it its management feels that there is need for their preparation. In managerial accounting, the management may be worried about how employees will react to managerial reports.

Managerial accounting segments the enterprise into its various functional parts and analyses information related to each independently in order to gauge the profitability of each of the parts. This makes it easier for managers to know which parts of the organization need to be worked on. Management accounting and reporting uses currencies, accounting techniques and accounting terminology to achieve its objectives.

Conclusively, financial accounting and management accounting are very important in the running of businesses. They are both aimed at having positive impacts on the profitability of businesses.