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Management Accounting Importance Doc

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Added on  2020-09-08

Management Accounting Importance Doc

   Added on 2020-09-08

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MANAGEMENTACCOUNTING
Management Accounting Importance Doc_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and the essential requirements of management accounting system.....................................................................................................................................................1P2. Financial information............................................................................................................3M1...............................................................................................................................................4D1................................................................................................................................................4TASK 2............................................................................................................................................5P3 Income statement...................................................................................................................5TASK 3............................................................................................................................................6P4 Budget for planing and control purpose.................................................................................6TASK 4............................................................................................................................................9P5 Management accounting to respond financial-issues............................................................9CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
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INTRODUCTIONManagement accounting is crucial to determine various aspect of business which has aimpact on profitability and production. The report will cover management accounting importanceand its essential requirements. Management accounting reports to make decisions and incomestatement using absorption and marginal costing system will be discussed in this report. Finally,the report will demonstrate budget preparation process and techniques to respond financial issueswithin Tech.TASK 1P1 Management accounting and the essential requirements of management accounting systemManagement accounting: Management accounting is important for Tech managers inorder to acquire financial and non-financial information regarding various business operationalactivities in order to increase the profitability and production. The system also works as adecision making tool for managers as it utilises information, cost techniques and data analysis inorder to make effective decisions regarding operations. The system helps to determineperformance level and metrics as well as provide information to compare various departmentperformances with business expectations effectively (Jones, 2015). It is a process of identifying,evaluating, measuring, analysing and interpreting financial information in the pursuit of Techobjectives and goals. Management accounting reports will help managers to establish day to dayand short decisions by providing accurate financial and statistical information.Difference between management and financial accountingManagement accountingFinancial accountingManagement accounting provides useful andimportant information regarding businessactivities in order to make manager’s decisionsmore effective.Financial accounting will help to collectfinancial information of business and preparestatements that help to take financial decisions.Monetary and non-monetary information.Only monetary information.Management accounting reports are made bymanagers according to the needs andrequirements.Financial statements and reports are made atthe end of accounting year effectively.Detailed, accurate and complete informationare provided by management accountingFinancial information of business resourcesand activities is considered by financial1
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reports.statements.Cost-accounting system: Cost-accounting system will help managers in Tech todetermine cost of products and services offered in the market towards customers effectively. Thiswill include normal, actual and standard costing. The cost of various resources will helpmanagers to make strategies and plans in order to manage profitability and production. For anexample, costs for inventories, management and strategies. This will also help to take benefits offuture advantages by managing a specific part of savings. This will be done by reducing extracosts from resources (Labro, 2015).Cost-accounting system will help Tech managers by providing actual selling cost ofproducts and services.Evaluation of profitability is done by cost-accounting system to meet with thecompetition.It will also help to make effective decisions to manage and control the costs of differentresources. Inventory management system: Inventories for business are raw materials, work-in-progress and finished goods. In addition to this, various items or resources used in productionprocess are also included in inventory management. Inventory management system will helpmanagers to determine the quantity of stock available in storage and quantity required forproduction. Management of inventories will reduce the extra costs and expenses such as capital,transportation, facility and insurance costs. FIFO is an acronym for first in, first out, a method for organizing and manipulating a databuffer, where the oldest (first) entry, or 'head' of the queue, is processed first. (LIFO) is an assetmanagement and valuation method that assumes assets produced or acquired last are the onesused, sold or disposed of first.PERPETUAL INVENTORY- it is a method which helps to towards accounting of inventorieswhich record sales and purchase of inventories using computerised point of sale systemeffectively.Periodic inventory is a system in which inventory updates are made on a periodic basiseffectively. 2
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