Management Accounting and its Importance in an Organization

MANAGEMENT
ACCOUNTING

INTRODUCTION
Accounting is defines as the procedure of managing the financial resources of a company.
It assists manager in controlling the flow of finance. Accounting method also help business
entity in maintaining the financial stability and ensuring effective as well as efficient utilization
of resources. It includes the several activities such as recording of tractions, and other monetary
records. Accounting statement is used by the management team in an organisation for identifying
the financial performance of the company and recognizing the area of improvement. Financial
records also assist manager in identifying the income earned and expenses incurred during the
particular financial year. Accounting also assists management team in analyzing several financial
issues and finding the appropriate solution for the same.
The purpose of the report is to develop the understanding about the accounting system
and analysing its importance in an organization. It also has focus on highlighting the major issues
in accounting problems and identifying the appropriate solution for the same in context of Tata
motor company.
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TASK 1
P.1.Explain management accounting and essential requirements of different types of
management accounting system
Management accounting is the approach which defines about preparing a proper
management reports in the organisation in order to management of all financial accounting
information in case of reduction of costing in business efficiently. Financial accounting refer to
the preparation of annual reports majorly for external stakeholders and management accounting
is a monthly reports which is made of internal performance assessment of company.
Management accounting reports are prepared by internal management team and accounting
executives for gaining financial reports in relevant form (Smith, Brännström and Jansson, 2015).
These reports are typically showed the amount of available in cash, sales revenue generated,
amount orders in hands, state of accounts payable and accounts receivable, outstanding debts and
raw materials etc. management accounting is most necessary for Tata organisational manager
which assist them to making proper decision in the company in respect to minimise the costing
and expenses of the company in the industry efficiently.
Cost accounting system: Cost accounting system is also one of the effective management
accounting approach in order to making proper management of monetary terms of the company
in the industry sufficiently. These are in tow form in the business which is job order costing and
process costing, both costing systems are being utilised by Tata company's manager in terms of
reducing several functionalities and manufacturing costing in the company in relevant manner.
Moreover, the cost accounting systems are being utilised by its manager in terms of proper
recording of production activities at the workplace efficiently (Kumarasiri and Jubb, 2016). This
could be used by organisational manager in order to appropriate tracking a raw material as they
go through the production stages of various car products at the manufacturing plant in the firm
effectively. When in the business, raw materials are used for manufacturing input then
immediately record the use of the materials by crediting the raw materials accounts for debiting
the goods in process accounts efficiently. This is also useful approach for Tata auto-mobile
organisation in order to recording of costing of each manufacturing activities which are being
done at the plant efficiently. This costing system can reduce the operational costing of the
company which is running in their production plant in the industry sufficiently.
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