Functions and Importance of Management Accounting

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Various functions and importance about management accounting...................................1
P2 Various systems of management accounting....................................................................3
M1 ..........................................................................................................................................4
D1...........................................................................................................................................4
TASK 2............................................................................................................................................5
P3 Preparation of income statements.....................................................................................5
M2...........................................................................................................................................8
D2...........................................................................................................................................8
TASK 3............................................................................................................................................8
P4 Merits and demerits in relation to different types of budgets...........................................8
M3.........................................................................................................................................11
D3.........................................................................................................................................11
TASK 4..........................................................................................................................................11
P5 Balance scorecard approach............................................................................................11
M4.........................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Accounting is the process in which all the transactions which are undertaken in the
business will have to be recorded. For this there will be requirement of the proper management
in which various processes will be used and this whole system is known as management
accounting (Strumickas and Valanciene, 2015). In this information will be needed so that it can
be used in the formation of reports and that will be collected by using various systems which are
available for this purpose. Also there are various tools that are used for the purpose of decision
making and they will be discussed in this report together with other aspects which are related to
management accounting. In a business various problems arise and in order to deal with them
there are various approaches and techniques that can be used and the understanding in relation to
them will also be provided in the report presented below in context of Imda tech.
TASK 1
P1 Various functions and importance about management accounting.
In the management accounting there will be various things that will be covered such as
here there are different methods and techniques which can be used for the enhancement of the
value of company (Vakalfotis, Ballantine and Wall, 2013). In an organisation there are various
policies and strategies that will have to be formulated and for that it will be needed that the
required information shall be collected. After this it will be required that the collected data will
have to be summarised so that proper conclusions can be drawn and also it will be possible to use
the data for the future reference. Then the framed policies will have to complied by in the most
appropriate manner so that the objectives and targets that are specified will be achieved.
In this there are various modifications which are required to n be made so that the
information that will be entered will be correct. With the help of all the data the management will
be taking the decisions that will prove to be beneficial for the company. In the accounting there
is another form of accounting which will be used which is financial accounting. In this the
financial aspects of the business will be covered. The difference that exist in the management
and financial accounting is provided in the table below:
Basis Management accounting Financial accounting
Purpose Managers will be required to Financial statements will be
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take various decisions and for
that various information will be
required and that will be
provided by this accounting.
prepared with the use of this form
of accounting.
Information There are two types of
information which are financial
and non financial and they both
will be included in this.
The financial information is the
one that will be provided in this
form.
Time period In this there is no time limit
which has been specified in this
respect.
They are required to be prepared
for the particular period of time
which is generally a duration of
one year.
Format In this there is no format that is
required to be followed by the
company for the purpose of
accounting.
In this preparation of the financial
statements is required and so a
particular format has been
specified for this.
Legal requirement In this the requirement to
comply with the legal aspects is
not specified anywhere.
Here there are various laws and
regulations which are specified
and are required to be followed.
Importance of management accounting.
In the business there are various decisions which are required to be taken so that the
objectives and targets which are specified will have to be achieved. For this there are various
tools and techniques which will be used and they will be covered in the management accounting.
This will help in the effective conduction of the operations and there will be less issues that will
have to be faced by the company (van der Steen, 2011). By this many benefits will be achieved
and they are described below:
 In the production of the product there are various cost which will be incurred and in them
some of the cost are such which are not important for the business and will not be
contributing to the profits of organisation so by this all the activities which are irrelevant
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