Wednesday, June 12, 2019

How do the differences between profit and non-profit organisations Essay

How do the differences between amplification and non-profit organisations affect the way in which they should employ budgetary controls - Essay ExampleBudgetary controls involve regulating the operations of an organization by establishing targets and standards with regard to expenditure and income. This regulation is done to ensure performance of a business line institution. It incorporates various methods of applying financial values to financial forecasts in the management of a business organization. These values are usually compared to actual estimates. Irrespective of whether business is profit or non-profit oriented, having budgetary control is essential since it makes sure that the organization realizes success. However, non- profit organizations usually use budgetary control methods that are different from those use by profit oriented business establishments (Kaplan, 2001). Budgetary control methods used by business establishments usually involve management be (Lanskroner, 2002). Management accountancy refers to the process whereby the management of a business establishment uses accounting information that is provided to them in order to make findings concerning the future of the company. For companies whose main intention is to realize profits, the accounting information is fundamentally future oriented and not past oriented. The information is also model based and not case based. The information is also mean for managers and not the companys stakeholders. This type of accounting is done on request by managers, and it is usually treated with a lot of confidentiality. In advantageous organizations, the objectives of budgetary control are 1) to ensure that an organization studies themselves are carefully applied in all of its aspects 2) to ensure that the whole management system comes unitedly and formulates how the business organization should be run in order for the company to realize maximum profits 3) to promote planning in order for everyone in the establishment to have a sense of direction 4) to ensure that a business establishments policies are clearly defined and that their main designing is to realize profits 5) to maximize the effect on how both capital and staff are employed 6) to reveal areas in the company that can be improved in order for the company to realize maximum profits 7) to facilitate the comparison of the business establishment with external environments with the view of increasing its tax 8) to coordinate and direct activities in the business to ensure that they lead to achievement of the companys goal which is maximum profits 9) finally, allowing and supporting the control fit of management by analyzing actual results with the expected results (Jiambalvo, 2009). This information about the performance of their staff is provided to the managers. Managerial accounting is basically designed for companies whose main aim is profit maximization. However, the use of some managerial accounting concepts is beneficial to non-profit business organizations because by adopting such techniques managers of non-profit organizations are able to set benchmarks or measurements that are appropriate for controlling, planning, and decision making. There are various techniques used when it comes to managerial accounting in a non-profit business establishment. One technique used is where the cost of raw material, jade and total overheads will determine the health of the business e

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