(DOC) Management Accounting - Assignment

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a) Explain the management accounting and the requirement of management accounting
system..........................................................................................................................................1
b) Presenting financial information.............................................................................................3
TASK 2............................................................................................................................................4
Cost evaluation methods.............................................................................................................4
TASK 3............................................................................................................................................6
a) Different kind of budgets and their advantages......................................................................6
b) The budget preparation process containing purpose of price and different costing system...7
c) Importance of budget as a tool for planing and control process.............................................8
TASK 4............................................................................................................................................8
Implication of management accounting system subject to respond financial problems and
conflicts.......................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Managerial accounting is becoming prior requirement of business entities and
organisations. Management accounting is adopted by organisation in terms of taking important
decisions and managing information in effective manner. Assisting decision making process and
analysing the plans is the main objective of management accounting. This report defines the
meaning of management accounting and types of management accounting system. Cost
evaluation methods are analysed in respect of evaluation profit (Wickramasinghe and
Alawattage, 2012). Type of budgets and planning tools are defined which are used in capital
budgeting. TECH UK limited organisation is used to define the meaning of management
accounting. Implication of management accounting system subject to respond financial problems
defined in this report.
TASK 1
a) Explain the management accounting and the requirement of management accounting system
I. Difference between management accounting and financial accounting
Basis of difference Management accounting Financial accounting
Objective Assisting managers and
accountants to make strategies and
business plans and make smooth
the decision making process.
Analysing, defining and presenting
the financial position of organisation
to managers is the main objective of
financial accounting.
Scope Business and organisation adopt the
management accounting system as
per their needs and suitability.
Wide scope found of financial
accounting in terms of managing
finance department of organisation.
Need It is not mandatory for
organisations to maintain
management accounting.
It is mandatory for organisation to
follow the rules and guidelines in
terms of keeping financial records.
Guidelines and
regulations
There are no specific rules and
legislations are made for maintain
and keeping management records
Rules and policies produced by
GAAP, IFRS and IAS are needed to
follow.
Review and control No any review and control required Financial accounts and records are
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for management accounting, it
depends upon organisational needs.
audited properly by auditors with
proper legal structure and guidelines.
Period There is no specific timeline
decided for management
accounting.
Financial accounts are made
quarterly, half yearly and annual
basis.
II. Importance of management accounting information as a decision making tool
Management accounting is basically used as a decision making tool which assist
managers and accountants for effective and better forecasting. For successful image of business
and organisation it is required to make effective. It provides a descriptive and in-depth
knowledge of business operations and management functions. With the effective use of
management accounting it become easy for managers to identify key performance indicators for
all the departments. This is mainly associated with collecting information, comparison and
making the plans in effective manner are analysed in this context.
III. Cost accounting system
This is one of the important element of business comes under management accounting.
Analysing the cost increasing factor and adopting tools to control cost is the main objective of
cost accounting system. This is a system which is majorly used by organisation to control the
cost and maximising profitability. Type of cost accounting systems and methods are used under
cost accounting system. Unit costing, process costing are some essential accounting system in
terms of analysing the cost and maximising profitability (Weygandt, Kimmel and Kieso, 2015).
IV. Inventory management system
This is one of the essential aspect in terms of managing the functions and management of
inventories. it is required for organisation and departments to manage and control the inventories
level for better execution of production and manufacturing process. It is a process of managing
the inventories and parts with the help of computer programs and software. Inventory
management system helps to track the level of stock, sales, order, purchase and delivery system.
In large organisations it helps to manufactures and creating work order, bill of material and other
production related documents.
V. Job costing system
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