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(PDF) Management Accounting

   

Added on  2020-12-26

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MANAGEMENTACCOUNTING

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1A) Explaining management accounting and essential requirement of accounting system........1B). Presentation of financial information....................................................................................4TASK 2............................................................................................................................................5Income statement as per absorption costing:..............................................................................5Income statement as per marginal costing.................................................................................5TASK 3............................................................................................................................................6A). Evaluating different kinds of budgets..................................................................................6B). Budget preparation process...................................................................................................7C). Importance of budget as a tool for planning and control process.........................................8TASK 4............................................................................................................................................8Explaining ways through which companies can respond to its financial problems which leadsto the sustainable success............................................................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................11

INTRODUCTIONManagement accounting can be termed as a process of preparing and presenting theaccounting information to the management of an organisation. This process will assist themanagement to make decisions and strategies in order to achieve the organisational goals.Management accounting helps in collecting and analyse and various data from all thedepartments in order to create a report that helps management to interpret the functions ofvarious department on the basis of financial and static reports. The present report will help inunderstanding difference aspects of management accounting and its requirement in Tech (UK)limitedwhich produces mobile chargers and other electronic gadgets for their retail stores in UK.It will describe the importance on MA in decision making process and different managementaccounting system. Further, this report will discuss different types of management accountingreports and their importance for management. A calculation for the income statement usingdifferent techniques will be presented. Furthermore, different kind of budgets will be discussed.At-last, report will explain different types of management accounting techniques which assist inresponding to the financial problems in companies.TASK 1A) Explaining management accounting and essential requirement of accounting system.I) Difference between management accounting and financial accounting:Management accounting can be refereed as the application of knowledge and skills whichhelps in the presentation of accounting information in a way which assist the management ofTech(UK) Limited in the formulation of policies. Such policies will help in planning andcontrolling of the operation of the undertakings. It is an important process which analyse andinterpret the financial information, report, records that helps the manager in their decisionmaking process in order to attain the organisation's goals and objectives. Financial accounting on the other hand is the process that involves the preparation andpresentation of the financial statement which consist of the financial information regarding themonetary performance of Tech(UK) limited (Ward, 2012). Financial accounting is used for thecompany's stakeholders especially the external users which assist them in making their decisionregarding investment in the company. Whereas, management accounting uses this financialinformation for the internal use only. However, it can be said that financial accounting has a1

much broader scope than management accounting. Management accounting have no specificformat and can be prepared whenever required by the management. But financial accounting hasspecific format and can be prepared in a specific accounting period, quarterly, half-yearly oryearly. The main objective of preparing management accounting is for internal decision makingprocess, while financial accounting is prepared for external use like investment decision andauditing.II. Importance of management accounting in decision making process.Management accounting is an essential process that helps mangers to take variousdecisions regarding departments functions and setting the goals and objectives of Tech(UK)limited as a whole. Management accounting plays an important role which assist the managers tomake the decisions for enhancing the business profitability:through analysis of the cost of operations, management accounting assist in determiningthe total expenses of company and its future activities. It helps management of Tech(UK)limited to make decisions in order to reduce the expenses of the company's operations(DRURY, 2013). It helps in making decisions in order to increase the sales so that theexpenses can be recovered and attain the goal of making maximum profit.Management accounting helps in preparing budgets for different departments based onthe past year expenses and revenue. As per the analysis a budget report is prepared andpresented to the management which help in analysing the variances. It assists themanagers to evaluate and determine various factors that causes and helps in makingefficient decisions to control this differences.Management accounting assist the managers to have overall reports and accounts of allorganisation function (Wickramasinghe and Alawattage, 2012). Which assist Tech(UK)limited in making strategic decisions to improve and maintain the operations of theorganisation and attain the organisational goals and objectives.III. Explain cost accounting systems.It can be termed as a method that company uses in order to determining the expenses ofthe product which assist in profitability analysis, inventory valuation and cost controllingprocess. It is very essential to estimate the accurate cost of the production for a profitable2

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