Management Accounting Imda tech | Report

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
Table of Contents.................................................................................................................................2
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
(I) Definition of management accounting and difference between financial accounting and
management accounting..............................................................................................................3
(II) Importance of management accounting information.............................................................4
TASK 2.................................................................................................................................................6
Preparing income statement for the month of September using marginal cost and absorption...6
TASK 3.................................................................................................................................................9
a) Different types of budgets and their advantages and disadvantages.......................................9
b) The process of preparing budgets............................................................................................9
c) Pricing strategies....................................................................................................................10
TASK 4...............................................................................................................................................11
(a) (I) Balance score card approach...........................................................................................11
CONCLUSION..................................................................................................................................13
REFERENCES...................................................................................................................................14
2

INTRODUCTION
Management accounting information supports a business for taking financial decisions in
effective manner. Present report is based on Imda tech that is a leading company and it offers
superior quality products for its business consumers. The report describes about different type of
management and financial accounting information that is being used by business. Along with this
importance of management accounting information has been explained. Moreover, types of
management accounting systems have also been mentioned in the report. Furthermore use of
balance score card method for getting financial governance for business and developing effective
strategies have been defined.
TASK 1
(a)
(I) Definition of management accounting and difference between financial accounting and
management accounting.
Management accounting is explained as a technique that is used in organization for
regulating financial conditions of business. It supports the management of company for taking
decisions relating to business matters. Data and information related to financial statement can be
collected and analyzed so that better and effective decisions can be taken for performing business
activities. Imda tech is a leading company and management accounting practices are used in the
organization for recording all the daily transactions that are performed in the company. Weak
performances in financial areas can be identified and on the basis of that measures can be taken
for making positive improvements in performances of business (Taipaleenmäki, 2014).
Meaningful insight can be gained by financial manger and it supports for executing
different types of financial activities in successful and effective way. With this it can be stated
that management accounting is a process of identifying, measuring, analyzing, interpreting and
communicating information related to business activities. There is wide difference between
management accounting and financial accounting and basic difference is in the accounting
system that is followed in both the practices On the other hand financial accounting is explained
as practice used for publishing financial information, statement and reports. Management
3

accounting information is used by internal users where as financial accounting information is
used by external users.
Financial accounting :- Major focus of financial accounting information is on external users and
it follows extremely imposed rules. It renders objective financial information and it has historical
orientation and information about the firm is given in summarized format in financial accounting
(Bebbington, Unerman and O'Dwyer, 2014). It is prepared by making use of historic data in the
past. Income statement, balance sheet and profit and loss account are being prepared in the
financial accounting system.
Management accounting :- Managerial accounting is a process of analyzing financial information
of business for decision making, planning, and controlling an organization's operations. In this
accounts record only the financial information (Fayard and et. al., 2014). It helps in recording
data and information that is required for taking financial decisions for the entity. Inflow and
outflow of cash, inventory and stocks and accounts are payable and receivables and it are added
in the management accounting.
(II) Importance of management accounting information
Imda tech is largest growing organization and it is critical that financial decisions should
be taken in organized and systematic way. Management accounting supports for taking quick and
effective decisions for business. It expedites for long term growth and success of the business.
Planned objectives and goals of the company can be achieved successfully by making use of this
approach.
Decision related to purchasing products and services of the company :- purchasing manager and
operation manager of the firm will get proper data and information that is required for buying
materials and other equipment for performing business activities in successful manner.
Comparison between cost of products can be made and it will help for buying affordable price
and super quality products for the organization. Difference between different option of making
decisions can be taken successfully.
Determining cost of products :- it is critical that investment cost of the company should be
recovered so that profitability can be enhanced. Management accounting information hasten for
setting the price of the products and services that are delivered by Imda tech. Along with this
4