Management Accounting of Tesco

Added on - 21 Jul 2020

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MANAGEMENT ACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and its essential requirements........................................................1P2 Management accounting reports............................................................................................4TASK 2............................................................................................................................................6P3 Income statement...................................................................................................................6TASK 3............................................................................................................................................8P4 Importance of budget in planning and controlling purpose..................................................8OPERATING BUDGET..................................................................................................................9TASK 4..........................................................................................................................................11P5 Balance Scorecard approach to respond financial problem................................................11CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting is the process of managing the organizational activities in orderto cope up with the financial problems occurring in the business. This report is based on therequirements of the various kinds of the management accounting system and the several methodsof accounting reports. In order to generate the net profit amount, Income statement is made byusing marginal and absorption costing method, it helps in generating new profit amount of theorganization. This report also lay emphasis on the advantages and disadvantages of the planningtools that are used control budget. And lastly,the balance scorecard approach and Just-In-Timemethod to respond financial problems for the firm will be discussed in this report.TASK 1P1 Management accounting and its essential requirementsManagement accounting and reports are very crucial for the managers of Tesco in orderto reduce the operational and financial issues and problems within the firm. Managementaccounting reports will help management to prepare financial reports and analysis, cost ofbusiness operational activities and suggestions to make effective decision making in the firm.Financial and costing data is also prepared by the management accounting reports and translate itinto important and useful information for the managers. This will help them to manage variousresources in the firm in order to increase profitability and production effectively. This will alsohelp to achieve better planning over business operations. This will enhance the value ofstakeholders and consumers in order to manage different financial and human resourcesefficiently.Management accounting as a decision making toolIt can be said that management accounting role is important as well as crucial for the firmin order to make decision regarding non-financial and financial activities within business. Themanagers are able to maintain the effectiveness of operational and financial activities for the longtime period by using data driven inputs (Bhattacharya, 2014). Performance matrix is alsoidentified by the managers by using management and accounting reports analysis. The reportscollect all the financial and non-financial data for the managers in order to manage the decisionmaking. The reports also evaluate the deviations which will help managers to measure differentaspects within the firm by accepting valuable suggestions.1
Difference between management and financial accountingBASISMANAGEMENT ACCOUNTINGFINANCIAL ACCOUNTINGDEFINITIONThe management accounting is aprocess which will help managers byproviding them useful informationregarding business activities in orderto make strategies and plans to makeeffective decisions.Financial accounting preparesstatements which provide financialdata and information to the managers.INFORMATIONMonetary and Non-monetaryinformation is considered.Financial accounting only consideredmonetary information.TIME FRAMEReports regarding managementaccounting are made by themanagers according to the demandand requirements.Financial statements are made at theend of the year which will be inaccounting period of time.REPORTDetailed and complete informationand data for the reports (Coe, 2014).Prepare summary report includingfinancial information (Gibbons,2015).PRINCIPLES OF MANAGEMENT ACCOUNTINGDesigning and compiling:Compiling and designing refers to make reports regarding financialstatements, accounting data and information and evidences related to the previous and future datawhich should be well design and complied by the mangers in order to achieve various businessgoals and objectives effectively.Integration:Integration is all about collecting useful and important data and information relatedto the management which will be integrated as well. This will help managers in Tesco to use it atmaximum and at the same time effectively. Accounting services are provided at low costs.Utilisation of business resources:Tesco should analyse all the resources within the firm inorder to manage the operational activities effectively (Otley, 2016). This will be done bymanaging available resources in the firm. Management accounting reports will help to evaluateall the resources within the business and will help them to keep in proper utilisation mannerefficiently.2
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