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Management Accounting System Design and Implementation: A Case Study

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Added on  2020-07-23

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MANAGEMENT ACCOUNTING [pic] [pic] INTRODUCTION A branch of study which helps to make an effective schedule related to financials in the workplace and then implement, monitor and execute it is known as management accounting (MA). Explanation of management accounting along with its basic needs At the environment of an entity when financial plan is required to prepare, implement, monitor and evaluate then MA is considered.

Management Accounting System Design and Implementation: A Case Study

   Added on 2020-07-23

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INTRODUCTIONA branch of study which helps to make an effective schedule related to financials in theworkplace and then implement, monitor and execute it is known as management accounting(MA). The present study focuses on various systems and methods involved in the MA conceptwith explaining their key needs. Tech (UK) Limited enterprise is taken as a base throughout theproject which has presence in the electronic industry of UK. Apart from this, in the currentassignment income statements are prepared for selected entity with the help of marginal andabsorption costing techniques. Further, different explanations related to budgets like benefits andlimitations, procedure for preparing it and significance is mentioned in this project of MA. At theend of assignment, Balanced Scorecard (BSC) approach is taken into consideration which helpsto respond various financial issues incurred in the business of Tech Ltd. TASK 1A. Explanation of management accounting along with its basic needsAt the environment of an entity when financial plan is required to prepare, implement,monitor and evaluate then MA is considered. It is useful for taking effectual business decisionsfor internal operations and enhance its growth rate in the industry of electronics. Apart from this,wide range of decisions are also taken with the help of MA and its several systems. It consistswith budget statements, forecast of financials, analysing business performance, applying severalstrategies etc. (Hald and Thrane, 2016). Therefore, key need of MA is for making effective andprofitable decisions in Tech Limited entity. I. Segregate two terms i.e. MA as well as financial accounting (FA)Management accountingFinancial accountingIt consists with internal aspects of anorganisation only where external elements aretotally ignored. On the other side, FA associated with all theexternal factors incurred in the companywhich are created by customers majorly. It helps to make only internal decisions ofTech (UK) Limited When business decisions related to externalenvironment are required to be taken then FAconsidered.At the time of using this aspect, the Tech Ltd isnot required to use all the statements ofWhen using FA then it is mandatory to prepareall the financial statements using provided1
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financials in legal manner.structure or format in legal manner.Reports under this are framed for assessinginternal business positions in terms of liquidity,efficiency and profitability (Joshi and Li,2016). Accounts of FA are prepared in order to trackperformance of Tech Ltd in the industry andcomparing with rivals as well. Further, auditing as well as publishing ofstatements is not required of these reports. On the other side, statements like B/S, I/S etc.are necessary to be published after completionof auditing process in legal manner.II. Value of MA to make effectual business decisionsMA is an area of study which applied in the workplace for taking internal businessdecisions basically. It helps to analyse cash position using the cash budget through which level offund availability in the workplace is determined. Along with this, profitability of the TechLimited is also analysed with the help of MA. On the basis of these both the aspects, decisionsrelated to fund raising and investment in profitable alternative is taken respectively. It consistswith capital budgeting techniques also which is supportive method to evaluate different aspectsof the investment. In addition to this, stock availability condition is analysed from the tools ofmanagement accounting (Nuhu and et.al., 2017). By using this, Tech Ltd become highly able forreducing as well as managing the overall inventory properly. Hence, it can be said that MA is atechnique through which proper and profitable decisions can be taken related to investment,expending, fund raising, costing etc. III. Cost accounting systemA method through which an organisation able to analyse overall expenses associated withit in proper way is known as cost accounting system. It gives information related to actual,normal and standard costs. Under this, all expenditures are recorded after classifying in variable,fixed and semi-variable. Basic reason for which this system used by Tech Limited is to track andassess total cost of production. Therefore, effectual pricing decisions can be taken which supportto attract customers and raise market share in the electronic industry of UK. 2
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