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TASK 13 (a): Difference between management accounting and financial accounting

   

Added on  2021-01-01

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Finance
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Management Accounting1
TASK 13 (a): Difference between management accounting and financial accounting_1

Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3(a): Difference between management and financial accounting..................................................3(b): Cost accounting systems.......................................................................................................4(c): Inventory management systems............................................................................................5(d): Job costing system................................................................................................................5(e): Different types of management accounting repots................................................................6(f): Need of a sound accounting system......................................................................................7TASK 2............................................................................................................................................7(a): Number of tickets that must be sold......................................................................................8(b): Tickets to be sold to acquire profit of 30000........................................................................8(c): calculation of profit if 8000 tickets are sold..........................................................................8TASK 3............................................................................................................................................9(a): Budgeting as a planning and problem-solving tool to deal with financial problems............9(b): The way in which financial governance can help to prevent financial problems...............11CONCLUSION..............................................................................................................................13REFERENCE................................................................................................................................142
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INTRODUCTIONManagement accounting is the process of preparing management reports that are mainlyused to analyze organizational performance so that effective decisions can be formulated in orderto establish a good market image. Various management accounting reports are generated by themanagers that are presented to internal stakeholders so that they may determine position of thecompany. For every business entity it is very important to analyze actual position of the businessso business information can be used to formulate strategies to attain long term success(Management accounting, 2018). A leading accountancy firm’ employee is going to write areference manual for Ever Joy Enterprises (UK) which a client of the accountancy firm andproviding entertainment and leisure services. This report aims at various aspects of managementaccounting such as its systems, reports. Calculation of profits and sales by using appropriatecosting methods, use of planning tools and financial governance in order to respondappropriately to financial problems have also been discussed under this report.TASK 1(a): Difference between management and financial accountingManagement accounting: It is a technique which is used to analyze organizationalperformance with the help of management accounting systems and reports that are presented infront of internal stakeholders. Managers of Ever Joy Enterprises (UK) evaluate all theinformation to formulate decisions for the betterment of the organisation. Financial accounting: It is the process of formulating financial statements that are required toanalyze organizational financial status. Three different statements are generated under financialaccounting that are income statement, balance sheet and cash flow. In Ever Joy Enterprises (UK)all of them are presented in front of external stakeholders so that they can take appropriatedecisions like investing and others. It is very important for the organizations to conduct financialaccounting every year so that detailed information about the company can be gathered (Amoako,2013).Difference between management and financial accounting: There are variousdifferences between both the accountings and all of them are as follows:Basis Management accountingFinancial accountingLegalThere is no legal requirements forAccording to law it is very important3
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requirementsmanagement accounting for thecompanies as it is not necessary forall the companies according to law.for all the companies to conductfinancial accounting every year.Format ofpresentationThere is not any specific format formanagement accounting to recordmanagement information.There is asset formant for theorganisations to present and recordfinancial data.Areas ofcoveragewithin theorganisationManagement accounting covers onlyinternal departments of theorganisations.Financial accounting covers externalarea of the organisation in which allthe organisational informationpresented in front of potentialinvestors and stakeholders.Type of datausedHistoric and predictive data isrecorded in management accountingreports.Statistical or historic data is recordedin financial accounting statements. Reports orstatementsDifferent types of managementaccounting reports are generated bycompanies. These reports areperformance, budget, accountreceivables etc.Three main statements are generatedunder financial accounting these arecash flow, income statements andbalance sheet.(b): Cost accounting systemsCost accounting system: This system is used by companies to determine the cost which needsto be set for the products or services that are sold or rendered by the company to its customers.This system helps to set appropriate cost so that organizational goals like profit and salesmaximization and customer satisfactions can be achieved (Bennett, Schaltegger and Zvezdov,2013). This system is used in Ever Joy Enterprises (UK) to set such price to their services thatcan be paid by their customer. It is very important for all the organizations to attract customersby providing them pocket friendly services. There are various kind of techniques that are usedunder cost accounting system that are as follows:Standard costing: This type of costing is used by companies to analyze differencebetween actual and budgeted cost. In Ever Joy Enterprises (UK) this accounting is used toanalyze that organization is able to meet its standards or not.4
TASK 13 (a): Difference between management accounting and financial accounting_4

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