Preparation of financial statements from collectees

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting systems and its essential requirements to an organisation............1
P2: Different types of management accounting reports..............................................................4
M1: Importance of different management system......................................................................5
D1: Various reporting method and accounting system integration.............................................6
TASK 2............................................................................................................................................6
P3: Techniques used to analyse cost with marginal and absorption costs..................................6
M2: Various type of Accounting tool and techniques................................................................8
D2 Preparation of financial statements from collected data.......................................................9
TASK 3............................................................................................................................................9
P4: Different planning tools used for budgetary control.............................................................9
Planning tools for budgeting.....................................................................................................10
M3 Analysis of various planning tool and its application for forecasting................................11
TASK 4..........................................................................................................................................11
P5: Financial issues and resolution of these problem and comparison with other company....11
M4 Analysis of planning tool to deal with financial issue........................................................13
D3: Evaluation of planning tools for accounting respond appropriately to solving financial
problems....................................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is an essential requirement of an organisation to form who
perform several functions such as identifying, analysing, calculating and recording each
transaction and presenting the financial information to the internal management so as to assist
them in making an effective decision and plans for the betterment of an organisation. In business
organisation whether small, medium or large various kinds of reports are prepared which
contains different informations such as total receivables, availability of cash, total revenues and
cost incurred in execution of business operation. Therefore, management accounting play an
important role in leading business towards success. Tech (UK) Ltd. which deals in
manufacturing Tech (UK) Limited, who is producing special charger for mobile telephone and
other carry-on gadgets for retail outlets in the UK is selected for the purpose of preparing this
report. The project includes different types of management accounting systems and its essential
needs to an organisation. Along with this, various management accounting reporting system are
also discussed under this report in detailed manner. The project also describes the costing
methods along with calculation of net profitability, planning tools to control budget and financial
tools to resolving financial issues that facilitate organisation to maintain their financial position
among their rivals in competitive market (Callahan, Stetz and Brooks,2011).
TASK 1
P1: Management accounting systems and its essential requirements to an organisation
Accounting: It is a systematic recording of financial transactions made by an
organisation on daily basis. It help in measuring the results of an organisation's economic
activities and communicate it to their variety of users such as investor, creditors, management
etc. It mainly consists of two parts such as management accounting and financial accounting
which are explained as under:
Management accounting: It is the process of identifying, measuring, analysing and
communicating relevant and accurate information to managers so as to make easy for them to
make an effective decision to achieve organisational goals. It provides both monetary as well as
non-monetary information which is useful for internal management to make better policies. As it
is formed as per the needs and requirements of company thus not mandatory.
Financial accounting: It is the process of recording, summarizing and reporting the
myriad of transactions made during execution of business operations over a period of time. Such
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transactions are summarised in the preparation of financial statements such as Profit & Loss a/c,
Balance sheets, Cash flow statement etc. that shows the actual and true financial position of
company over a specified period. It is more useful for external parties as it allows them to make
decision regarding further investment in company.
Tech (UK) Ltd. is a small-sized company which is engaged in manufacturing electronic
gadgets such as special mobile chargers and other carry-on gadgets to retail outlets in UK
therefore it is more important for company to record each transactions made by each department
on daily basis so that the actual position of company at present time can be easily identified. It
assist management in identifying the deviations which causes differences in actual and standard
output. Preparing managerial reports is well supported by different management accounting
systems which are briefly discussed as under:
Types of management accounting systems:
Cost accounting systems: It is considered as an effective system which is adopted to
identify the total cost incurred in the execution of different business functions. It prepares
management to form an effective budget for future time period after analysing the cost incurred
in business activities in previous years (Dražić Lutilsky and Dragija, 2012). By using such
system, the management of Tech (UK) Ltd. is able to record, categorising, estimating the cost of
business functions in order to achieve high profitability. Cost accounting system is basically
classified into three methods which are define as under:
Normal costing: Normal costing uses indirect materials and labour costs to estimate
production costs. It provides a more consistent valuation of production costs which eliminates
month to month fluctuations. Tech (UK) Ltd. produced 10,000 mobile chargers. The actual
materials used totalled to be $50.00 per charger and direct costs were $20.00 per charger. The
manufacturing overhead determined per charger is $10.00. So the managers determines it costs
the company $80.00 to produce one mobile charger.
Actual costing: Actual costing uses the actual cost of materials and labour to calculate
production costs. This is beneficial when analysing a specific portion of the production process
and an exact accounting of costs is needed. For example, a Tech (UK) Ltd. may estimate that
production of charger will cost $700, but the actual cost may in fact be $800. One often is not
informed of the actual cost until it is incurred.
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