Management Accounting: A Comprehensive Analysis of Tech (UK) Limited

MANAGEMENT ACCOUNTING
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Executive Summary
The reports of management accounting have been prepared on taking the data on monthly basis.
Management accounting involves the devising planning, decision making, and performance
measurement system. This also provides expertise in financial reporting and also assists the
management to implement and formulate the organization's strategy. A brief analysis of different
types of budgets and costing system can be used in any type of the organization has been
discussed. The small business like Tech (UK) Limited the business owner generally focuses on
giving marketing effort. In order to evaluate the decisions, the accounting managers examine the
costs.
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Table of Contents
Introduction......................................................................................................................................4
Task 1.............................................................................................................................................5
A. Explanation of management accounting.................................................................................5
I. Distinguishing the management accounting from financial accounting...............................5
II. Importance of management accounting as a decision-making tool.....................................5
III. Cost accounting system......................................................................................................6
IV. Inventory Management System..........................................................................................7
V. Job Costing System.............................................................................................................7
B. Presentation of Financial information.....................................................................................8
I. Types of managerial accounting reports...............................................................................8
II. Importance of the information to be presented....................................................................9
Task 2...............................................................................................................................................9
Income Statement.........................................................................................................................9
I. Absorption costing methods..................................................................................................9
II. Marginal costing methods..................................................................................................11
Task 3.............................................................................................................................................13
A. Budget advantages and disadvantages..................................................................................13
B. Budget preparation process...................................................................................................14
C. Importance of budget.............................................................................................................14
Task 4.............................................................................................................................................15
Balanced Scorecard approach....................................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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Introduction
Management accounting is a process of analyzing the business costs and business operations to
prepare the internal financial records, reports and also aids the decisions of the managerial
people. This development of the accounting system helps in terms of achieving the business
goals. Management accounting system measures and defines the financial performance of the
business industries. In this report, a brief analysis on the Tech (UK) Limited has been taken for
financial study. Finally, the balanced scorecard has been recommended for the organization to
make an analysis of the financial health.
Task 1
A. Explanation of management accounting
Management accounting helps in providing the timely statistical and financial information to the
business managers. This system helps to prepare the financial reports and the managers of the
organization will be able to make short-term managerial decisions in day to day activities.
Maintenance of solid accounting practices is essential for the business growth (Andre et al. 2016,
p.150).
I. Distinguishing the management accounting from financial accounting
Managerial accounting is also named as cost or managerial accounting system and that generally
differs from the financial accounting. Management accounting produces the business reports for
the internal stakeholders of the company as opposed to the external stakeholders. The results
derived from the management accounting are termed as periodic reports for the managers and
CEO of the organization. Management accounting system generally includes the details of
organizations cash, generated sales revenue, accounts payables and receivables.
Management accounting and financial accounting generally differs from the information
available inside it in the number of ways. The reports of financial accounting generally based on
the historical data, whereas the management reports are primarily focused on looking forward
(Anelli and Puglisi, 2015, p.409). Financial accounting reports and statements are publicly
reported whereas the management accounting systems are used for internal use only and also
kept confidential in the organization.
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