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Management Accounting on Tesco Assignment

   

Added on  2021-02-19

14 Pages2931 Words217 Views
Accounting

Table of ContentsINTRODUCTION...........................................................................................................................3Section 1...........................................................................................................................................3Role of management accounting in the organization..................................................................3Section 2...........................................................................................................................................5Various types of cost in management accounting.......................................................................5Section 3...........................................................................................................................................7Effectiveness of marginal accounting system and their pros and cons to the organization........7Section 4...........................................................................................................................................8Objectives of budgeting in regard to promote effectiveness.......................................................8CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11

INTRODUCTIONAccounting is the process of systematically recording, measuring, analysing andevaluating the accounting data to get the final information for the decision-making and to knowthe financial position in the market. The various types of accounting like managementaccounting, cost accounting, financial accounting are used for the different purpose. Tesco is 3rdlargest supermarket if UK. It is retail service based goods and services based industry which usethe accounting tools to measure and evaluate the financial position and market share. The reporthighlight the role of management accounting in the organization. It helps to explain the variouskind of cost on different basis such on the type direct and indirect cost, on the basis of functionproduction if non production cost etc. The report also highlight the marginal cost with theiradvantages and disadvantages and how the cost affect the effectiveness of the organization. Italso includes the different objectives of preparing budget for the company.Section 1Role of management accounting in the organizationManagement accounting play an important role in the organization. It provides data to getthe useful information for making decision and improve the efficiency and effectiveness of thecompany (Kieso, Weygandt, and Warfield, 2016). The role of management accounting are asfollows :Forecasting : Forecasting is the process of determining the future situation to take thecurrent decisions. Management accounting provides various data regarding the companyperformance to forecast the future condition. For example the growth of the supermarket ofTesco in past few month help to forecast the increasing demand of product and services in thefuture.Recording : Management accounting role is to record the financial data to get the usefulinformation. They record the data in different formats. For example the sales, purchases,operating expenses are recorded in trading account by the Tesco to get the gross profit of theorganization (Schaltegger, and Burritt, 2017). The all non operating expenses and income arerecorded in income statement to know the net profit of the organization. Tesco record all itsassents and liability in the balance sheet account to get the real debtor and creditor of theorganization or to know the profitability of the company. 3

Analysing : Management accounting play a vital role in analysing the financial data.They use the recorded financial data to analyse the performance of the company that weather thecompany is producing the profit of not (Loughran, and McDonald, 2016). Tesco analyse theperformance by considering the different data such as the sales of the month and compare it withthe previous month sale to get the fluctuation and variances in data and find out the reasonbehind the variances.Support decision-making : the role of management accounting is also to support thedecision-making system. It provides information regarding the company performance and givethem different alternative to make decisions (Ahmed, and et.al., 2017). For example theincreasing sales of grocery items reflect that customer is more wiling to buy the grocery itemsvia online and offline method which help the management to take the decision regarding theincreasing production of grocery items.Comparison of management accounting and financial accountingMeaning : the focus of financial accounting is to prepare the financial statement such asbalance sheet, income statement, profit and loss account and cash flow whereas the focus ofmanagement accounting is to use the financial data for making policies, strategies and plan forthe organization. Information : Financial accounting is mainly provides the monetary information such asthe profit, sales, operating expenses etc. whereas management accounting provides the bothmonetary and non monetary information (Difference between the financial accounting andmanagement accounting, 2019).Objective : The objective of financial accounting is to provide the information to theoutside users such as suppliers, creditors, customer, government, shareholders etc. whereas theobjective of management accounting is to provide the information to the internal department likeowner, employees and mangers (Butler, and Ghosh, 2015).Time frame : Financial accounting prepares the financial statement at the end ofaccounting period whereas the management accounting prepare the report on the requirement ofdata.4

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