P1 Management Accounting And its Essential Requirements
Added on 2020-10-22
15 Pages4140 Words379 Views
Finance
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Management Accounting
INTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Management accounting and its essential requirements........................................................3P2 Presenting financial information............................................................................................7M1 Benefits of management systems under the TECH (UK) LTD............................................8D1. How management accounting system and management accounting reporting integrateswithin the company process........................................................................................................9TASK 2............................................................................................................................................9P3 Calculation of net profit under marginal and absorption costing: -.......................................9M2. Application of techniques:.................................................................................................12D2. Data interpretation:.............................................................................................................12TASK 3..........................................................................................................................................12P4. Budget and its advantage and disadvantage........................................................................12b).Different types of common costing systems which can be used for budgetary control:......13c) Importance of budget as a method for planning and controlling purpose:...........................13M3. Use of various planning tools for making budget:............................................................14M4 How financial tools are used for evaluating the financial problems:.................................14TASK 4..........................................................................................................................................14P5 Balanced Scorecard Approach can be used to respond its financial problems: -................14D3 How planning tools for accounting respond for solving financial problems:.....................15CONCLUSION .............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONAs per this record a technique for accounts for management, for providing important andreliable report for accomplishment of purpose to the management. Management Accountingincludes functions such as planning, directing, controlling and helps management to performthese functions in better and acceptable and in a systematic arrangement to organization in shortway (Arroyo, 2012). In this record, TECH (UK) LTD. manufactured a unique sound system andit believes that, applying the principles of management accounting will lead to effectivecommunication and proper understanding in different department with regard to availability ofinformation for all the departments for making improvement in ability to make decisions. In thisrecord organization will prepare the accounting records related with management in such a waythat it will help them in making the decisions that are best for the purpose of the company. Thereexists many type of techniques which can be used to check the overall achievement oforganization in achieving desired standards in a better and acceptable way.TASK 1P1 Management accounting and its essential requirementsManagement Accounting is a way by which we interrelate, investigates, anddemonstrate the accounting data that is collected by considering the financial information andcosting information. It is used in controlling procedures of the organization and formingconclusions for same and is also providing better concern regarding performance of organizationto Board, CEO” s and accounting executives of the organization.The areas where management accounting can make difference are:Measuring riskEvaluating performance standardAllocating resources properlyAssisting in readying financial statements of the organization Forming policies and making decisions which are appropriate for the organization.1. Differences between management accounting and financial accounting: -BaseManagement accountingFinancial accountingMotiveIt is used to give important information toFinancial accounting is an art ofclassifying, summarizing and
the management for performing itsfunction.recording of events andevaluating the results thereof inan appropriate way.Rules to befollowedThere is no requirement for following therules and requirements of accountingprinciples as well as conventions in themanagement accounting (Boyns andEdwards, 2013).In case of Financial accountingthere exists some rules andregulations which are to befollowed if applicable to thecompany and there is legalbinding to follow suchrequirement. Time periodManagement accounting records areupdated at regular time period in course ofthe financial yearThese records are alwaysdeveloped at the end ofaccounting period i.e when allthe transactions of organizationfor the year are completed.UsageManagement accounting considers thefinancial information as well as non-financial information for evaluating theperformance standard of the companyFinancial accounting considersonly the financial informationin preparing the final accountsfor the year.ConsiderationIn management accounting, eachsubdivision of the organization is treated asa distinct entity. Therefore, performancereports and their analysis are preparedseparately for each division of theorganization wherever required.Financial accounting areconstructed by considering allthe subdivisions of theorganization as one.2. The important tools of management accounting information for assisting in makingdecisions for the department managers are given below: -Activity based costing: - (ABC) is a cost accounting method that analyze costs tooverhead actions and then apportions those costs to product. ABC costing identifies the relationsamong costs, overhead processes and products which are manufactured by the organizationthrough this relationship. It apportions indirect cost to product indirectly as compared to theprevailing old methods of costing. It assists in reducing overhead cost to a much lower level
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