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Introduction to Management Accounting

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Added on  2020-02-03

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Explaining the different types of management accounting systems that improve reporting system 5 Preparation of income statement by using absorption and marginal costing system 6 TASK 3 8 a. Stating various types of pricing policies that can be undertaken by Imda Tech 10 TASK 4 11 Defining balance scorecard and its implementation in the strategic decision making 11 CONCLUSION 11 REFERENCES 13 INTRODUCTION Management accounting focuses on the preparation of highly suitable report regarding cost, profit and other financial aspects. In this regard,

Introduction to Management Accounting

   Added on 2020-02-03

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Management Accounting
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Table of ContentsINTRODUCTION......................................................................................................................3TASK 1......................................................................................................................................31. Explaining the following....................................................................................................3a. Defining management accounting and differentiates it from financial accounting...........3b. Presenting the importance of management accounting system as a decision making tool42. Explaining the different types of management accounting systems that improvereporting system.....................................................................................................................5Preparation of income statement by using absorption and marginal costing system.............6TASK 3......................................................................................................................................8a. Types of budget and its advantages as well as drawbacks.................................................8b. Defining the process of budget preparation.......................................................................9c. Stating various types of pricing policies that can be undertaken by Imda Tech..............10TASK 4....................................................................................................................................11Defining balance scorecard and its implementation in the strategic decision making........11CONCLUSION........................................................................................................................11REFERENCES.........................................................................................................................13
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INTRODUCTIONManagement accounting focuses on the preparation of highly suitable report regardingcost, profit and other financial aspects. For making highly effectual day to day decisionbusiness entity requires information about internal performance in terms of financials. In thisregard, by undertaking suitable monetary reports business organization can frame highcompetent strategies and policies. Hence, management accounting system and framework aidin the decision making aspect to a great extent. The present report is based on Imda Techwhich is involved in the business of manufacturing as well as selling of mobile chargers andother electrical equipments. In this regard, report will describe the manner in whichmanagement accounting system or framework helps in evaluating internal financialperformance. Further, report will also provide deeper insight about the traditional and moderntechniques of budgeting. Besides this, the central focus of such study is to highlight themanner in which absorption costing system helps in making suitable decisions over marginalcosting. It will also provide information about the way in which balance scorecard systemhelps in making suitable decisions. TASK 11. Explaining the followinga. Defining management accounting and differentiates it from financial accounting Management accounting system is the process which lays high level of emphasis onassessing, measuring, analyzing and interpreting financial information. By using managementaccounting tools and techniques accountant prepares report that assists managers in decisionmaking aspect to a great extent. Moreover, it is not possible for the higher management tomonitor the performance of each department in one time. In this, reports which are preparedby management accountant help higher authority in making competent strategic and policyframework (Granlund, 2011). Hence, by using such system Imda Tech can enhanceproductivity and profitability through the means of optimum utilization of funds.There is significant difference takes place between management and financialaccounting in the following manner:Basis of differenceManagement accountingFinancial accounting
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Aim The main aim ofmanagement accountant is tofurnish information about thedepartmental performance inthe form of reports which inturn helps in devisingsuitable plan for meeting thegoals. Financial accounting ishighly concerned with thedisclosure of monetaryinformation at specified date.StakeholdersManagerialaccountingreports are undertaken byinternal parties such ashigher management formaking highly suitabledecision that enhancebusiness performance. Both internal and externalparties make use of financialaccounting reports fordecision making. Legal obligation Management of Imda Tech isnot legally obliged to preparemanagement accountingreports. Company has legalobligation to prepare reportsfor satisfying the informationneed of investors. Formats Undermanagementaccounting, informal systemis followed by the managersto prepare reports.In this, reports are preparedand published by the firm inspecific format. Rules and regulations Reports prepared on the basisof management accountingused only at internal level.Hence, managers do haverequirement to followspecific rules andregulations. GAAP and IFRS containmain standards of financialaccounting. Hence, byfollowing such rules suitablereports can be prepared(DifferenceBetweenAccounting and FinancialManagement, 2017). FrequencyManagerial reports areprepared by manager on thebasis of daily, weekly andmonthly basis.Unlikemanagementaccounting, manager focuseson preparing quarterly, semi-annually and annual basis. Information served It serves monetaryinformation that helps infulfilling the organizationalgoals.Financial accounting systemprovides deeper insight aboutmonetary information thatcan be verified through themeans of evaluation. b. Presenting the importance of management accounting system as a decision making tool In the recent times, decision making aspect is highly based on the information that isprovided by management accountant department. System of management accounting ishighly significant in the following manner:
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