Management account-R12 Coursework Example | Topics and Well Written Essays - 4500 words

Management account-R12 - Coursework ExampleThe conjecture aims at reflecting management accounting remains trunk as dependent on factors that crop up from time to time. This theory brings details of the factors which rise up and affect a management accounting system. According to this contingency theory, the point factors affecting a management accounting system are unique to each organisation. Organisations vary from peerless another in terms of operations thus the difference in the form of adoption, functioning and sophistry of a system. This means that each participation will have a management accounting system which is specific to its form. This explains why we do not have a globally adopted accounting system. hap theory has made bold steps in helping us understand how accounting and budgets endure and should be used to deal with the issue of management guarantee. The theory basically supports the handling of accounting and budgets in a way which recognizes related chan ges which might occur in the company (Sharma, 2009). The contingency theory is commonly really important in ensuring that the management accounting system in a company is in sync with the prevailing factors at a given time. The efforts by this theory have been successful finished the manipulation of the factors that affect a management accounting system among other factors. ... With this, the organisation does not ask to have management control based on a sophisticated management accounting system. under such a situation, themanagement will control the organisation on the basis of the set tabu budgets. The contingency theory also shows how accounting and budgets croupe be used to handle matters of management control through the consideration of strategies and mission as situational factors. Basically, the type ofstrategies and mission applied by a company determines the kind of system for management accounting to be put in use. For example a business firm may decide to apply a strategy of low cost and defense. Under such a strategy, a company will work towards standard products, few lines of products, low cost operations as well as policies promoting economies of scale. with this, there will be consider to have plans capable of making employees hold low cost mentalities, incentives to workers depending on the results of evaluation of financial performance and adherence to budgets among others. This means that there is need for a management accounting system which is a bit sophisticated. Contingency theory shows that accounting can be utilized to handle the issue of management control through the determination of the accounting education need and use (Emmanuel et al,1990). According to this theory, the kind of accounting information needed by an organisation is very key in determining the management accounting system required. In a situation where the accounting information required iscomplex, then a highly sophisticated management accounting system is required. If a firm requires just simple information, then a less sophisticated management accounting system is required by an organisation. There is also the intended use of the