Management Accounting and Business Strategies
Added on 2020-06-05
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1: Management accounting and essential requirements of management accounting systems..1P2: Different types of managerial accounting reports and their importance..............................3TASK 2............................................................................................................................................5P3: Calculation of cost and preparation of income statement.....................................................5TASK 3............................................................................................................................................7P4: Different kind of Budgets and their merits and demerits......................................................7TASK 4..........................................................................................................................................10P5: Use of management accounting to respond financial problem...........................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
INTRODUCTIONManagement accounting enables an organisation to make an effective decision with thehelp of information collected from different departments with a motive of achieving competitiveadvantage. This allows managers2_1525961397 (1) to perform specific functions such asstrategic management, performance appraisal and risk control. It helps in formulating policiesand strategies through which they can direct the employees to work in the best possible way.Tech (UK) Ltd. which deals in providing special charger for mobile telephones and other gadgetsfoe the retail outlets in the UK. The project covers the difference between management andfinancial accounting as well as the importance of management accounting and reporting systemin the growth of business organisation. Moreover, the benefits and drawbacks of differentfinancial tools to control budgets are also discussed under this report (Garrison and et. al., 2010).. TASK 1P1: Management accounting and essential requirements of management accounting systemsManagement accounting:It refers to the process of preparing and maintaining financial reports and documentscontaining all financial and non-financial information which is helpful in making effective plansand strategies for future business activities. Such documents help company and its stakeholdersin identifying the actual financial position on the basis of which the decision has been taken bythem for the betterment of an organisation.The main functions which need to be performed by managers of Tech (UK) company aredescribed as below: Strategic management: The accountant manager can make effective planning andstrategies with the help of using data available through management accounting and reportingsystems (Fullerton, Kennedy and Widener, 2014).Performance management: The performance of company depends on the performanceof employees therefore, it is essentially required for manager to analyse the performance ofemployees on the basis of their past year performance so that they can motivate them byproviding rewards, compensation etc.Risk management: With the help of accounting and reporting system, the manager can1
identify the risk which can affect the performance of company and accordingly, make correctivemeasures in order to overcome such risk.Difference between management and financial accountingManagement accountingFinancial accountingIts main purpose is to make effective plans andpolicies to operate business activities moresmoothly.Its main focus is to show true and fair financialposition of company through preparingfinancial reports such as P&L a/c and Balancesheet.It provides financial as well as non-financialinformation to the management of company.It only provides financial information tocompany.Its main aim is to provide relevant data to theinternal management of company so that theycan make an effective decisions.Its main objective is to provide the financialdata to the outsiders which includes investors,stakeholders etc.It is prepared as per the needs of theorganisation.It is prepared annually. Importance of management accounting in decision making processDetermination of aim: With the help of information available through managementaccounting system, the managers can easily determine the target which needs to be achieve innear future (Dillard and Roslender, 2011). Helps in formulation of plans: After analysing the financial and non-financialinformation, the managers of different departments can mutually make an effective decision andplans for the betterment of an organisation.Measurement of performance: The accounting systems provides all information relatedwith financial transactions, employee's performance etc. which help management to identify theactual performance of company. Analysing the performance through comparing actual withstandard help in determining and removing deviation if any.Different management accounting systemsThere are various management accounting systems which are listed below:2
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