Management Accounting and Finance : Assignment
Added on 2020-01-28
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ManagementAccounting
TABLE OF CONTENTINTRODUCTION .............................................................................................................................................3TASK 1 .............................................................................................................................................................3P1 (i) What is management accounting. Differentiate between management accounting and financial accounting. 3(ii) Importance of management accounting information as a decision making tool...............................4P2 Describe the systems of management accounting.............................................................................4TASK 2 .............................................................................................................................................................5P2 (i) Income statement under marginal costing for the year end September 2010..............................5(ii) Income statement of absorption costing for the year end September 2010......................................5TASK 3 .............................................................................................................................................................6P4 (a) What are the types of budgets and their advantages and disadvantages.....................................6(b) The process of preparing budgets......................................................................................................7(c) Explains what are pricing strategies...................................................................................................7TASK 4 .............................................................................................................................................................8P5 (i) What is balanced scorecard and how can be used to identify the financial problems .................8(ii) How it can be used to improve financial governance and development of effective strategies.........8CONCLUSION .................................................................................................................................................9REFERENCES ................................................................................................................................................10INTRODUCTION Management accounting is a combination of finance and management, that includes business tools and techniques, it also added the real values of any business organisation. It helps managers in order to take
financial and non-financial decisions. The practice of management is extends in three areas, such are as: - Strategic management, risk management and performance management. There is a huge difference in management accounting and financial accounting; management accounting is being focused on overall activities of the company. Although financial accounting is relates with providing details regarding products,divisional, operations, plans and individual activities. Management accountants are able to work across the organization, they are working not only just in finance but also in articulating business strategies & policies, implications of big financial decisions or monitoring risk (Ward, 2012). The information is provided by financial managers is helpful in developing dynamic solutions in order to improve business. Management accounting is helpful in making budgets and collects information regarding cash inflow, outstanding debts and revenues. On the other hand, financial management procedures, the useful data and information that is related with other business functions ie. Department managers. The responsibilities of these accountants is to providing comprehensive data of planning and forecasting, mentoring and reviewing cost inherent and performing variance analysis. TASK 1 P1 (i) What is management accounting. Differentiate between management accounting and financialaccounting. Management accounting is the process of manages accounts and financial statements of the organsiation. It is also helpful in supplying information exactly and timely and also proviides statistical dataof the organisation to the managers so that they can easily take day to day or short term decisons. It involvesthe tools and techniques of financial management that are helpful in formulating strategies and policies. The reports of management accounting that are only useful for internal environment, and they are confidential. InImda Tech Limited, management accounting is helpful in analysis the corporate as well as competitive environment, evaluate strategic options. It reviewing risk control and evaluate auditing by which managers can easily make financial strategies. It is able to communicate effective and gives suggestions on product developments and manufacturing (Kaplan and Atkinson, 2015). Management accounting manages the price and cost for competitive advantage and is able to set up or executes projects. It is helpful in reduces risk and uncertainties in organisation by applied forecasting theories. It is assistive in evaluation of overall business environment, internal as well as external environment by calculating capital expenditures. Difference between Financial accounting and management accounting:- Financial AccountingManagement accountingFinancial accounting is concerned with prepare the financial reports and statements of outsiders, such as:- creditors, investors, suppliers, stakeholders, customers and lenders. Management accounting is also known as managerial accounting, and it is the accounting that helps managers in order to formulate strategies, planning, forecasting and policies. It is based on various principles, assumptions and convention like consistency, realisation, matching, materiality and going concern etc (Burritt, Schaltegger. and Zvezdov, 2011.). It is able to provide both quantitative and qualitative information’s and data as well that is being assessed and captured by accounting managers.The statements of financial accounting are made for one financial year that enables financials positions, performance and profitability of the company. It is answerable for day to day and short term financial decisions that can be helpful for internal uses only. The format of financial accounting is specified and provides only monetary information as well It’s format is non-specified and its provide both monetary as well as non-monetary information to the managers.
(ii) Importance of management accounting information as a decision making tool.The significance of management as decision making tool, it is helpful in providing needed data whether the organisation is in profit or loss. Management accounting information is helpful for making decisions that short term or as well as long term also (Parker, 2012). In Imda Tech Limited, it is working as a powerful tool that makes business more successful. The information is used by managers to determines that what product to be sold and how to sell it. Meanwhile it is helpful in relevant cost analysis, activity based analysis and make or buy decisions of the company. Management accounting is the process that is usein businee welfare in order to the development of financial accounts and statements. Along with this, it forces managers to weekly intrepretation of all financial activities in business orgabsiation so that firm can maintain their all accounts and balance sheet as well. It also assisitive in evaluate the revelant cost of the price and detemine the sales revenue and profit. The process management accounting is also helpful in make or buy decisions of the business so that maangers can easily improves the quality of their product and services. It also helpful in taking relevant decisions in order to compete forthcoming factors of external market. P2 Describe the systems of management accountingThere four main systems of management accounting, which are as follows:- Cost accounting system: - This system is also known as costing system or product costing system. It is used a framework in order to estimate the price of their products for cost control, profitability analysis and inventory valuation. Cost accounting is procedure of summarising, allocating, classifying, analysing, collecting and recording the alternative course of action that are helpful in controlling costs (Otley and Emmanuel, 2013). In standard costing method, all production cost are applied or charged to the charged for the inventory by using standard prices and cost. In normal costing is uses historical methods of costing, in that overhead is charged or applied by the inventory, and in actual costing method a new type of product process that can be used as inventory. Inventory management system :- The system is helpful in manages stock and inventory of the business organisations. It is able to deals with when order to and how order to. The main aim of inventory cost accounting is to minimize the inventory cost in order to generate high returns. If Imda Tech, hold more than the average level of stock, it is an substantial opportunity cost because the investments are tied up in these inventories. There are some explicit costs that holding inventory, such are as:- insurance cost and standard cost. Basically, it is an on-going process of moving products and parts into and out from organisation’s location. Many companies manage their on daily basis so they can easily place new orders and projects. Job costing system :- Job costing system is the procedure of accruing information about the price is associated with a specific production or job (Granlund, 2011). The information is helpful in determining the correctness of a company's evaluation system, that is able to quote cost that allow fora reasonable profit. Price optimising system :- In that system, the price of the product is assessed, means it involves on which price product will be sell out in market or what is its wholesale rate. M1Management accounting is helpful in providing the financial data and records to the managers, so that they can easily use it at the time of needed. It is also helpful in reduces expenses by reviewing the cost of economic resources and other business operations and activities. It also improves cash flow of the company by making annual budgets.Management accounting is a system by which managers can manages the accounting reports and statements of business organisatin. It relates with day to day accounting
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