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Report on Management Accounting and Finance

   

Added on  2020-06-06

14 Pages4065 Words43 Views
Finance
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Management Accounting
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Table of ContentsINTRODUCTION...........................................................................................................................2TASK 1............................................................................................................................................2P1 (a) Management accounting and requirement of management accounting system...............2P2 (b) Presenting financial Information......................................................................................4TASK 2 .........................................................................................................................................5P3 Calculation of profit as per marginal and absorption costing................................................5TASK 3............................................................................................................................................7P4 (a) Different type of budgets and their disadvantage and advantages...................................7P4 (b) Process of preparing budgets by using various costing system.......................................9P4 (c) Importance of budget as a tool of planning and control purpose.....................................9TASK 4..........................................................................................................................................10P5 Balanced scorecard approach...............................................................................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................131
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INTRODUCTIONManagement and accounting is a tool to operate and manage the financial, accountingand performance records in an ethical and effective manner (Lennox, Francis and Wang, 2011).Accounting is a method which is used to keep records and information in figures and numbers.At present, accounting tools are widely used by organisations to make an effective andsystematic structure of businesses. This is a report to be submitted to finance director in Tech(UK). It is a company which provides special charger for mobile telephone and other carry ongadgets for retail industries in UK. There are different management accounting reports anddifference between management accounting and financing accounting explained in this report.Different types of budgets are explained and differentiated in this report as well.TASK 1P1 (a) Management accounting and requirement of management accounting systemAccounting was basically used in maintaining records and information which is collectedfrom multiple departments of organisation. Now, the accounting methods and techniques areused as management perspectives too. Managers and directors use accounting reports andinformation in decision making and strategic planning process. Being an involvement ofmanagers and directors in accounting process, this is also known as managerial accounting.Management accounting contains rules and regulations, accounting standards. GAAP (GenerallyAccepted Accounting Principles) provide rules and regulations regarding keeping records andinformation in particular formats. Difference between management accounting and financial accountingManagement Accounting Financial accountingThis accounting is known as managerialaccounting system which is used by themanagers, directors and stakeholders, investorsand financiers of company. This accounting system is used to form thefinancial records properly. This is known ashistorical approach which is made up ofmultiple rules, guidelines and standards offinance. This remain focused upon future events andincidents. It helps the managers to analyse riskfactors and future opportunities. There are various financial records maintainedlike cash flow statement, balance sheets, costof capital, fund flow statement, ratio analysis,2
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etc.Management accounting contains annualreports, financial reports and performancescore card.There are different law boards and institutionsmade which provide guidelines to retain therecords in a proper manner. These are (GAAP),IFRS (International Financial ReportingStandards) and ISAB (InternationalAccounting Standards Board).Data and information which are providedthough management accounting reports areused in making plans and strategies.This is a part of internal reporting which isused by finance manager to make finance andinvestment plans as well as procurement offunds.Importance of management accounting as a decision making toolDecision making is a process used to make future plans regarding growth anddevelopment of organisation (Grabner and Moers, 2013). Business environment is full ofcompetitors and rivals. Effective operations and management are the only factors which canseparate organisation from competitors and provide competitive advantage. Managementaccounting is a combination of multiple accounting and management system which provides alarge area to analyse overall performance of organisation. Versatile nature and dynamic scopemake management accounting more continent and flexible. Information and data remain accuratewhich helps in making straight to the point strategies and plans for further growth anddevelopment.Management accounting systems are useful and essential for all the types oforganisations. There are various types of activity based costing techniques used in managementaccounting. It helps in analysing the cost of product at particular stage or activity. Managementaccounting information is mostly used in the manufacturing process. It provides required sourceswhich remain essential in the manufacturing of product.Cost accounting systemCost management and cost accounting; both are important parts of managementaccounting. This accounting method is used to analyse the manufacturing cost and control extracost. This accounting system is used in manufacturing industry which deals in product andservices. It helps in deciding the base price of product. This cost is considered as gross3
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