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Plagiarism Scan Report

Summary

Report Genrated Date

20 Nov, 2017

Plagiarism Status

93% Unique

Total Words

698

Total Characters

4702

Any Ignore Url Used

Content Checked For Plagiarism:

Most startups ail, but why do they ail? Well, there is plenty o reasons on why do these

early stage companies exactly ail. One o the critical issues behind ailure o these

startups is a lack o management accounting. The key role o Management accounting is

to provide management with inancial/statistical and non- inancial in ormation to decide

on operational(day-to-day), tactical(mid-term) or strategic (long term) activities. The typical

reports include sales revenue, cash availability, accounts payable/receivable and other

relevant per ormance indicators. A unctional management accounting is highly important

to the startups which are going to witness a phase o growth as uncontrolled growth is one

o the major actor or startups ailure.

Let us discuss ew areas o Management Accounting Systems which the

entrepreneurs/ ounders o early stage companies should keep in consideration to ensure

controlled path or the company s growth.

a) Cost and Pro itability Accounting

Even though this task is backward looking(analyzing historical in ormation), it is o

immense importance to any organization.

Cost accounting involves calculation to ind out costs to produce a single product. It

includes methods such as Activity Based Costing (ABC) and Standard Costing.

Pro itability accounting is about determining the pro itability o customer, products,

divisions and other parts o organization.

Cost and Pro itability Accounting is highly considered while pricing the products.

b) Short term planning and budgeting

As the uture o startups is highly uncertain, these companies are short term oriented.

Short term in this task re ers to a time rame o 12 months or less. Budget is de ined as:

A quantitative expression o a plan or a de ined period o time. It may include planned

sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash lows. CIMA O ficial Terminology, 2005

Two important budgets or the startups are 1) Cash Budget to make sure the company has enough cash available in order to remain solvent at all times and 2) Operating Budget budgeted Income statement (Pro it and Loss Statement) and its sub budgets (budgeting o cost elements) to manage current expenses level and plan or uture.

c) Investment planning and monitoring

This task involves analysis o investments in physical assets such as building, equipment etc. but can also include investments in intangible assets such as Patents and Research and

Development (R&D). Common methods involved in this task are Return on Investment (ROI), Internal Rate o Return (IRR) and Payback periods.

d) Strategic management accounting and long term planning

There is no clear conceptual ramework as to what the strategic management accounting

is. However, Cadez and Guilding (2008) categorized various accounting techniques under 5 categories;

1. Costing

2. Planning, Control and Per ormance Measurement

3. Strategic decision making

4. Competitor Accounting

5. Customer Accounting

The main reason to per orm this task is that it provides in ormation to the management to

support strategic decision making long term ocus (1,2 and 3 above) and that it has an

external ocus to any organization (4 and 5).

e) Management control

Based on the object that is being controlled, Merchant and Van der Stede (2003) has

devised ollowing three categories;

1) Results Control

These controls control the employees by rewarding/supporting good behavior and

punishing undesirable ones. It is most commonly used controls on management accounting

based control.

Results Controls typically involves Financial Reporting, Per ormance Measures, Targets and

Compensation.

2) Action Control

Action controls make sure that employees per orm in certain prede ined desirable actions

and they do not act in a way that is particularly harm ul or the organization.

Action controls can be behavioral constraints, pre action reviews, action accountability, or

redundancy related.

3) Personnel/Cultural Control

Personnel controls make sure that employees know what the organization expects o

him/her and they control and motivate themselves.

Cultural control are values, ideologies or attitudes that the employees o a company share and which dictate what is durable or undesirable. These controls may be written or unwritten rules that governs the behavior o the employees within the organization.

Many entrepreneurs think accounting just as a statement o pro it or loss use ul or taxation, but there are lots o important in ormation hidden behind the numbers. Proper adoption o management accounting system is essential or strategy development o any early stage companies.