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Management Accounting System - Tech

   

Added on  2020-09-17

17 Pages4392 Words23 Views
MANAGEMENTACCOUNTING

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Management accounting and different types of Management Accounting System.............1P2. Different management accounting reports............................................................................4TASK 2............................................................................................................................................6P3. Calculation of cost and preparation of Income statement.....................................................6TASK 3............................................................................................................................................7P4. Advantages and disadvantages of planning tools for budgetary control..............................7TASK 4..........................................................................................................................................11P5. Use of management accounting system to respond financial problem...............................11CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14Illustration IndexIllustration 1: Budgeting Process...................................................................................................10Illustration 2: Balanced Scorecard.................................................................................................12

INTRODUCTIONManagement accounting means provision of the financial data and advising themanagement of company for using the financial data in organisation and development of itsbusiness. It is the accounting system which includes the management decision making,budgeting, performance analysing and the implementation of all these systems. The presentreport is based on Tech which is a UK based company producing charger for mobile telephoneand other gadgets for retail outlets. Management accounting information is an important tool ofdecision-making for department managers. The report will shed light on cost accounting system,inventory management systems, Job costing systems and the different types of managerialaccounting reports. This report also discuss that department managers should have moreinvolvement and should take more responsibilities for their departments. ZBB is based on theassumption that previous year’s budget is zero and to make the new budget of the current yearmanagement must take zero as the base.TASK 1P1. Management accounting and different types of Management Accounting SystemManagement accounting is also known as managerial accounting. ManagementAccounting helps manager in making provision for financial and non- financial decision-makinginformation. According to the IMA (Institute of Management Accounting), it is a profession thatinvolves management decision making, performance management systems, devising planningand it also helps management in formulation and implementation of organisational strategy.Management accounting looks after the business events in consideration with the need of thebusiness (Takeda and Boyns, 2014). It is the process of identifying, analysing, measuring andinterpreting the information. It also provides timely and accurate statistical and financialinformation with the help of management reports that are required by managers for making theirshort- term and day- to- day decisions.Management Accounting System:Management Accounting system consists of components of management accounting thatincludes budgets, income and expenses report, return on investment report, managementperformance report to compare budget results with actual results and sales analysis. Some other1

less known components of management accounting are standard costing of cost of goods sold,ABC (activity- based-cost) analysis and balanced scorecard.Importance of Management Accounting System in organisation:Management accounting system play a critical role in the group learning of theorganisation. The main purpose of management accounting in an organisation is to help managementin decision making by collecting, communicating and processing information that willhelp to plan, control and evaluate the organisational strategy and business processes.It helps in forecasting the future that aids decision making by giving answers to thefollowing questions- should investment be made in more equipment? Is there a need ofdiversification? Should the company merge or acquire a new company? It forecasts thefuture trends by answering all these questions.It helps in making decision related to the make or buy a product from a third party.Management accounting helps in forecasting cash flow and its impact on business.It helps in knowing and understanding the variances and discrepancies in what is actuallyachieved and what was predicted.It analyses the expected rate of return to the organisation.Management Accounting vs Financial AccountingBasisManagement AccountingFinancial AccountingMeaningIt provides related information to the management for decision- making.It focuses on preparation on financial statements for providing financial information to its users.Interested partiesExternal as well as Internal partieslike management.Only External parties likeshareholders, investors, etc.FormatIt does not have specified format.It has specified format to presentinformation. TimeThe reports are prepared as per theIt is generally prepared at the end of2

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