Management Accounting: A Comprehensive Guide for Tech (UK) Limited

Management Accounting
1

Contents
Introduction.................................................................................................................................................3
TASK 1.......................................................................................................................................................4
Introduction.............................................................................................................................................4
(A) Explain management accounting and also the requirements for the management accounting
systems....................................................................................................................................................5
I. Difference between Management accounting and financial accounting..........................................5
II. Importance of management accounting information as decision making tool..................................6
III. Cost Accounting Systems............................................................................................................6
IV. Inventory Management Systems..................................................................................................7
V. Job Costing Systems........................................................................................................................7
B) I. Different types of management accounting reports.........................................................................8
II. Why information should be presented in an understandable manner..................................................8
M1) Explain benefits of management accounting systems and their application...................................10
D1) How management accounting system and management accounting reporting are integrated within
organization...........................................................................................................................................11
Conclusion.............................................................................................................................................12
TASK 2.....................................................................................................................................................13
P3) Prepare Income statement using marginal and absorption costing. (M2, D2)..................................13
TASK 3.....................................................................................................................................................15
2

Introduction...........................................................................................................................................15
(A) Different kinds of budgets and their advantages and disadvantages..........................................16
(B) Process for preparing Budget.....................................................................................................18
(C) Importance of budget as a tool for planning and controlling process.........................................19
(M3) Analyze use of different planning tools for preparing and forecasting budget..............................20
(D3) Evaluate how planning tools for accounting respond appropriately to solving financial problems
to lead to sustainable success.................................................................................................................21
Conclusion.............................................................................................................................................22
TASK 4.....................................................................................................................................................23
(M4) Analyze how respond to financial problems management accounting can lead to sustainable
success...................................................................................................................................................24
Conclusion.................................................................................................................................................25
References.................................................................................................................................................26
3

Introduction
This report deals with the explanation of the management accounting and the requirements of the
management accounting through which the Tech (UK) Limited can attain the success. For the
application the difference between the management accounting and financial accounting is
depicted with that the importance of the management accounting principles are also highlighted.
Various types of report which are prepared by the organization are also highlighted so that the
performance of the individuals can be depicted. The practical analysis of cost through the
marginal and absorption costing so that the cost can be controlled and the revenues are increased.
The various kinds of the budgets are prepared and how they help in planning is also depicted.
Beside this the report also explains that how management accounting and planning tools can help
in solving the financial problem of Tech (UK) Limited so that the sustainability can be attained.
4

TASK 1
Introduction
This part of the report explains about the various accounting systems such as the cost accounting
systems, inventory management systems and job costing systems that are used in Tech (UK)
Limited. With this it also explains why the information in the management accounting reports
should be understandable. The various management accounting reports are also examined.
5

(A) Explain management accounting and also the requirements for the management
accounting systems.
Management accounting is the process through which the Tech (UK) will be able to analyze,
evaluate and identify the financial performance and arrangement in the market of competition.
I. Difference between Management accounting and financial accounting
The financial accounting is the accounting which will help the Tech (UK) Limited in keeping the
track on financial transactions so that the profitability can be attained and the organizational
goals can be achieved.
Point of Basis Financial Accounting Management Accounting
Aim The financial accounting
focuses to make the
communication in
organization regarding the
financial position (Modell,
2012).
The main aim of the
management accounting is for
taking strategic decisions in
the organization.
Rules and Regulations It follows the specific rules as
well as the regulations such as
GAAP, IFRS, etc.
It does not require any
specified rules and regulations
(Modell, 2012).
Review The accounts are reviewed by
the external auditors and the
regulators of the business.
As there is no rules followed
so there is no need for any
specific review to be done
externally or internally
(Accounting tools, 2015).
Frequency for evaluation The evaluations are done by
preparing the annual reports
annually, quarterly or as per
the requirements.
The evaluation is done
according to the need, there
does not requires any specific
frequency.
Focus The financial accounting
focuses on whole organization
as whole (Accounting tools,
2015).
It focuses on particular
segment of the organization so
that the decision can be taken
accordingly.
6