Topic

A Report on Business Accounting

Instructions

JJ Ltd is a small-medium sized enterprise that manufactures a variety of electronic control systems for household white goods. Management decision making process of the company relies heavily on the information about stock valuation. You have recently joined the Business Accounts Team of the company as an intern, and your manager has asked you to produce a report on the following:

i. Explain the difference between planning, control, and decision making in management. Your answer should be in the context of Business Accounting, and include an example of each of these three aspects of management. (250 words)

ii. Critically discuss the four inventory valuation methods (Throughput, Direct or Variable, Full Absorption, and Activity Based) and their impact on the total value of the inventory.

(750 words)

Answer preview

Planning plays crucial role that in any business finance as it involves organizing the resources that will be essential in attaining a particular goal in respect to optimum use of the available financial resources. A specific course of action is adopted in order to reach a desired outcome hence financial constraints play a key role in determining the outcome of the plan. For example, JJ Company wants to import a new model of television sets worth $250,000 from country A. Controlling on the other hand involves looking for alternatives to enable the success of planned activities by providing adjustments. Providing leadership in terms of cost is want makes a good control system. For example if the plan to import TV sets from country A did not succeed, an alternative should be developed and a new country (B) of importation established. Decision making is a broad concept that encompasses both controlling and planning and depends on acquisition of diligent information and executing a decision. For instance, JJ wants to make a decision on which method of stock valuation will be useful hence it will decide on whether it will use Full Absorption or Activity-Based approach.

Word count: 1134