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Report on Concepts of Management Accounting and Financial Accounting

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Added on  2020-06-04

Report on Concepts of Management Accounting and Financial Accounting

   Added on 2020-06-04

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Report on Concepts of Management Accounting and Financial Accounting_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Analysis of management accounting and their essential requirement in organisation..........1P2 Different types of management accounting reports and their importance.............................3M1...............................................................................................................................................5TASK 2............................................................................................................................................6P3 Application of absorption and marginal costing for preparation of income statements........6M2...............................................................................................................................................9D2................................................................................................................................................9TASK 3............................................................................................................................................9P4 Different kind of budgets and their importance as planning tool..........................................9M3.............................................................................................................................................11TASK 4..........................................................................................................................................11P5 Use of management accounting systems to respond financial problems.............................11M4.............................................................................................................................................12D3..............................................................................................................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................14
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INTRODUCTIONEvery organisation is need to adopt effective management accounting systems whichhelps in recording of business transactions in more effective and appropriate manner.Management accounting systems are considered as decision making tool which is used internallyby manager. The different tools which are included in this system are budgeting, varianceanalysis, BEP, cost-volume-profit analysis etc. It helps the manager to formulate different reportsfor improvement of understanding among different departments about their functions(Baldvinsdottir, Mitchell and Nørreklit, 2010). Overall, it helps in completion of theirorganisational objectives within stipulated period of time. Tech(UK)Ltd. Is manufacturingorganisation which provides their products to retailer.In the present report explain about, concepts of management accounting and itsdistinguish with financial accounting, importance of management accounting information asdecision making tool for departmental managers, application of different managementaccounting systems in organisation, different types of managerial reports and its importance inorganisational scenario. Also, contribution of cost accounting techniques in preparation ofincome statements, budget preparation process and contribution of management accountingsystem to overcome from financial issues.TASK 1P1 Analysis of management accounting and their essential requirement in organisationManagement accounting- It is a procedure of preparing the management accounts aswell as reports which gives timely and accurate statistical and financial information neededthrough employers to take decision on short term basis and day- to- day (Christ and Burritt,2013). Manager of Tech business organisation uses accounting provisions in context to providethe better and effective information before taking any kind of decisions in company.
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Management accounting systems are use different accounting provisions in order todevelop various accounts which gives relevant information or data related to variousorganisational functions. It is helpful for Tech company in developing policies, process ofdecision making and also day to day operations. Importance of management accounting as decision-making toolPerformance measurement- It assess company in measuring performance of staffmembers as well as their efficiency. Under this, there is a comparison of the actual performancewith standardised performance to set deviations under which important steps can executed(Fullerton, Kennedy and Widener, 2014).Resources allocation- Tech firm able to accomplish proper utilisation of availableresources through resource allocation to different departments and divisions in company. Risk assessment- It helps and determines all risk related factors with in Techorganisation which can reduced by the effective management.Presentation of financial statement- Management accounting gives proper or effectivepresentation of Tech company with needed data or information. Different financial and cost datamakes easy for firm to show precise and better financial reports which will be helpful in takingbetter decision making.Formulation of budgets: Management accounting system helps in formulation ofdifferent kind of reports as per the performance of different departments. It helps in formulationof budgets according to their needs.Difference among financial and management accountingFinancial accounting is an area of accounting which is related with analysis, summaryand also reporting of all financial transactions come to business (Garrison and et. al., 2010). Itconsists make of financial statements which are available for public consumption. Management AccountingFinancial AccountingIt gives relevant and accurate data toemployers to prepare strategies, policies andplans for running business in an effectivemanner. It is an effective accounting system whichfocus on developing financial statement of firmto give financial information and data tointerested parties.It used future information and data nothistorical, for planning purpose.Its main focus on past economic events,statements which include historical data.
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