The important divisions namely; cost ascertainment, cost presentation, and cost control are covered through cost accounting. The cost presentation serves as a link between ascertainment and cost control. The management of every organization is interested in the maximization of the profits through minimization of wastages, losses and ultimately cost. Under the circumstances mentioned above, frequent reports on all functional areas of the business to achieve these objectives are to be submitted to the management at frequent intervals.
The most commonly used management information reports are budgets, revenue statements, costs reports, statistical information, cash flow statement, fund flow statement, and report consisting of the details regarding capital expenditure. Budgets quantify the intentions of the management in financial figures. Detailed budgets are prepared for each division which is finally merged into a consolidated budget highlighting the overall objectives and policies of the organization. To make the figures comparable, the budgets should include the figures of the previous year and revised estimates for the current year also. Some companies do depict a long-term forecast of five to seven years indicating the trend of profitability and growth along with the consolidated report.
In fact, the revenue statements highlight the profitability of each department, product, and group of products over a short duration namely; a month or a quarter. These are supplemented with statistical information and figures for the previous month/quarter as well as year-to-date.
Cash flows/funds flow enable the management in scheduling the resources. They are yearly projections divided into different months. They assist the management in deciding when and how much to borrow. The capital expenditure statements highlight the capital expenditure plan of the company. In respect of projects that are under completion, capital expenditure progress statements are prepared.
However, a detailed study of the reports may be made through the required classification of the various accounting reports based on their nature and purpose.
Purpose of reports: The following can be the purpose of the reports.
a) Reports designed to cater to the needs of the owners;
b) Reports serving as a tool for management action.
Nature of reports: Taking into consideration the nature of reports according to John Mclean the following breakdown has been adopted in presenting the reports:
a) Enterprise reports – Enterprise reports portray the financial information either about a specific activity or function or about the entire operative activity of the enterprise as a whole;
b) Control reports- Control reports are designed to measure the actual performance with the standard/budged performance;
c) Investigative reports – Investigative reports are designed for special study for investigation purposes.
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