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Management Accounting Concepts Report

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Added on  2019-12-18

Management Accounting Concepts Report

   Added on 2019-12-18

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MANAGEMENT ACCOUNTING
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................4TASK 1............................................................................................................................................4a)..................................................................................................................................................4i) Define management accounting and different between management and financial accounting.....................................................................................................................................................4ii Importance of management accounting information................................................................6b) Different types of management accounting systems...............................................................7TASK 2............................................................................................................................................8Costing methods..........................................................................................................................8TASK 3..........................................................................................................................................10(a)Different type of budgets and their advantages as well as disadvantages.............................10© Pricing strategies....................................................................................................................13TASK 4..........................................................................................................................................13a) Balance score card approach.................................................................................................13CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
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INTRODUCTIONIt is essential for each and every business enterprise to record their transactions in day today operations. Thus, for such purpose business requires to undertake management accountingconcept and provide financial information to other stakeholders. Business appoint accountants torecord financial transactions so that information could be recorded in a timely manner. However,it also proves to be very efficient tool and thus results in directing and controlling the actions ofbusiness (Otley and Emmanuel, 2013). It has been assessed that there has been great differencelies in management and financial accounting. They both are different from each other.Management accounting is considered as the decision making tool that provides differentinformation regarding purchase or sell, product costing and budgeting etc. While, financialaccounting is prepared in relation manage orecord financial information so that shareholderscould be given best information regarding investment (Fullerton, Kennedy and Widener, 2013).Present study has been prepared in relation to Imda Tech (UK) Limited in relation to managetheir accounting information which results in achieving desired goals and objectives. Reportanalyses the income statement which is developed on the basis of Marginal and Absorptioncosting techniques. Also, it discusses the advantages and disadvantages of different types ofbudget. TASK 1a)i) Define management accounting and different between management and financial accountingThe concept of management accounting is considered as the process through whichcrucial information could be identified, analyzed, measured and interpret the financial data sothat desired results could be attained. Hence, manager of Imda Tech Limited needs to make theirday to day transactions of business which results firm to carry out their functions in an effectiveway. Main purpose of preparing such accounting system is helping firm to look forward andexecute internal affairs so that success can be attained (Bhimani and et. al., 2013). Managementaccounting is crucial part of business and thus helps them to improve their corporate brandimage. There also lies tough competition and thus Imda needs to prepare good budget so that
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financial decisions could be made accordingly. It results in preparing an effective income andcost of business within particular fiscal year. Further, it also focuses upon assessing the salesvolume and income of firm so that financial decision could be made in terms of improvingbusiness performance. Therefore, managers of Imda aim to allocate resources using Zero BasedBudgeting so that assumptions could be made in relation to attain good results (Chan, Wang andRaffoni, 2014). Following are the difference between financial and management accountingwhich are discussed underneath- Financial AccountingManagement AccountingFinancial accounting is considered as thetransactions carried out by company throughtracking its past performances. Businessesadopt standardized guidelines provided byauthorities in regard to record and collectinformation within financial statement(Dobroszek and Szychta, 2015). While, management accounting understandsthat providing accounting information andrecord inflow and outflow of cash so thatappropriate decisions could be taken. It alsohelps in controlling the function and performseffectively within firm (Schaltegger, Gibassierand Zvezdov, 2013).Here, all the type of information is recordedwhether it is financial or non financial.While, it records only financial information.Main objective of financial accounting is that ithelps in providing financial reports to externalparties so that they can make investmentdecision (Cleary, 2015). Further, the aim of preparing managementaccounting is that it assists in providingaccounting information to internal parties orwithin the firm (Fayard and et. al., 2014). It is based upon historic data of firm. While, it is based upon forward looking data sothat future decision could be made. Here, accountant of firm determines thefinancial information through carrying out theaccounting standards (Wouters andKirchberger, 2015). While, it assesses that management is requiredto adopt management information system inregard to carry out the desired results. Financial accounting helps in generating thereports which are related to preparing thefinancial reports. Further, it helps in preparing managementreports and thus prepares accurate and reliableinformation so that management could use thatand improve their performance (Hartmann,Perego and Young, 2013).It helps in preparing financial or annual reportsat the end of accounting year for the use ofexternal stakeholders. While, the management report generatesmonthly and weekly records so thatimprovement within department could becarried out (Hiebl and et. al., 2013).Here, the report shows the income statement orbalance sheet and profit and loss account(Alsharari, Dixon and Youssef, 2015). It indicates the sales revenue, availability ofcash, account payable and inventory etc.
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