Management Accounting and Decision Making: A Case Study of Imda Tech

MANAGEMENT
ACCOUNTING

INTRODUCTION
The method or process under which different kinds of the financial transactions are to be
made, recorded, analysed, assessed, evaluated etc. is known as management accounting which is
the most helpful for entity in order to make several internal business decisions. The firms and
managers often use the respective aspect only while analysing the internal business process along
with taking decisions at the workplace. The report is about the Imda Tech firm which produce
specific type of the mobile phone charges as well as gadgets and then supply to all retailers
within UK. The existing report describer regarding significance as well as systems of the
management accounting and profit and loss account under marginal and absorption method. In
addition to this, it helps to reader to understand about the budgets, its process and methods to
take pricing decisions. At the end of study, it focuses on balanced scorecard (BSC)
TASK 1
A) i Defining management accounting along with differentiate with financial accounting
The process in order to prepare the accounts which helps to assess accurate and reliable
data along with the appropriate time for making the day to day as well as short term business
decisions is called management accounting. With the help of management accounting the
business like as Imda Tech able to know that which are the constraints occurs at the workplace in
the internal. In the accounting, there are generally two aspects comes which are like as
management and financials further difference among these both is as follows:
Management Accounting Financial Accounting
The accounting method which is used for the
very short time as well as day to day decisions
for internal is identified as management
accounting.
The process in which financial statements are
prepared using the transactions and make the
long term or yearly business decisions is called
as financial accounting.
The key purpose of such accounting is for the
internal business analysis as well as helps to
the internal business stakeholders.
When management as well as the external
stakeholders like as customers, investors,
suppliers etc. going to make decisions then use
the financial accounting systems (The
Differences Between Financial Accounting &
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Management Accounting. 2017).
The accounts and reports under current system
are to be made within any period of time or as
the management wants and requires.
For making the financial accounts as well as
reports then there are particular time periods is
fixed like as yearly, quarterly or half yearly
and within such time frame only Imda Tech
can make the statements of financials.
In the management accounting any kind of the
formates and structures are not settled out for
make the reports and statements.
While preparing the reports then there are
specific kinds of formates, disclosures along
with the accounting theories and standards are
settled which are necessary to follow.
Primary focus of management accounting is on
the present or existing data as well as
estimating for the future periods (Kaplan and
Atkinson, 2015).
Financial accounting focus or looks upon the
past and historical data for assessing the
business performance and make fruitful
decisions.
A) ii Significant of management accounting in order to make decisions
Management accounting is one of the best as well as highly appropriate tool for the Imda
Tech business entity in order to make the decisions for manufacturing products like as mobile
phone chargers due to evaluating level of expenses and costs. When the management assess that
there are how much amounts is to be spent for manufacturing the products as well as services
then make the decision for charging prices to sale in the market. Apart from this, total cost of
production is also to be determined with the help of management accounting process and aspects.
In this kind of accounting process inventory or stock management comes which helps to derive
the value of stock which is available with the entity in its workplace. Moreover, Imda Tech firm
able to take decisions that how to utilize the inventory and then make it healthier in the industry
of currently operating (Ward, 2012). It provides information to the Imda Tech management of
each and every small transactions which relies under the financials aspect and by this firm able to
know that how much amount is currently used. On the basis of the recorded transactions
company able to make the statements of budget to make and derive decisions for the further
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