Management Accounting in Imda tech Limited : Assignment

MANAGEMENT
ACCOUNTING

INTRODUCTION
Management accounting can be defined as process of preparing records that supports in
getting accurate information about financial condition of the company. It is statistical tool that
gives in-depth information to managers so that they can make sound decisions for the welfare of
entity. Any form of accounting which help the managers to conduct business operations more
efficiently can be termed as management accounting. It helps in getting the accounting
information to the managers so that individual can make sound decisions for the well fare of
entity. It is the essential tool through which management can forecast the uncertainties and can
prepare planning for reducing such adverse effects. Present report is based on the Imda tech
Limited which is a manufacturing firm that produces mobile telephones and other gadgets for the
retail outlets in UK. Current assignment will discuss the importance of management accounting
as decision making tool in the organization. Job costing, price optimizing, inventory
management system and cost accounting system will be described in this study. Calculation of
absorption and marginal costing will be done in this report in order to prepare the income
statement. Furthermore, explanation of balance score card and its uses will be illustrated in this
report.
TASK 1
a) Functions of management accounting
Management accounting is the essential tool that plays significant role in the
organizations. Four main functions of management accounting are as following:
Planning: It is one of the most important function of management accounting. By this way
manager of Imda Tech Ltd can get necessary information such as marginal costing, probability,
trend etc. and plan the activities to achieve the goal of the organization.
Organizing: It is another function of the management accounting through this way manager of
cited firm can organize the activities in effective manner. It tries to organize the operations as per
the current market situation (Kokubu and Kitada, 2015).
Controlling: By using the budgetary control, accounting ratios, standard costing mechanism
manager of Imda Tech Ltd can control over the cash flow and can evaluate the capital budgeting
significantly.

Decision making: It is the most important function of management accounting, with the help of
this managers can make short term or long term business decision and can support in the growth
of the company.
i. Definition of management accounting and difference between management accounting and
financial accounting
Both these terms are important for the business and by his way company can improve its
efficiency level. Financial accounting can be defined as branch of accounting hat tracks
financial transactions of the organization regularly. It helps in preparing the financial records
such as income statement, balance sheet etc. On other and management accounting the branch of
accounting in which managers use information in order to make sound decisions for the
organization. Difference between management accounting and financial accounting are as
following:
Differences Financial accounting Management accounting
Base It monitors the transactions of
the organization time to time
and according to the
monitoring results
management makes the
decisions (Grunewald, Syrbe
and Bastian, 2014).
It collects the information from
the financial accounting and
according to these detail
management takes decisions .
Decision making It helps in getting the financial
statements and according to
this statements company takes
the decisions.
Decision making is done with
the help of planning,
controlling and handling of
operations.
Rules and standards It is necessary to follow the
instruction of GAAP for
preparing the financial
statements.
No specific rules just needs to
focus on internal operation s.