Management Accounting in Tech (UK) Ltd

MANAGEMENT
ACCOUNTING

Contents
INTRODUCTION....................................................................................................... 3
TASK 1.................................................................................................................... 3
P1: Management accounting system and its essential requirements in Tech (UK) Ltd.................3
P2: Various types of accounting reporting system.............................................................5
TASK 2.................................................................................................................... 7
P3: Calculation of cost and preparation of income statement................................................7
TASK 3.................................................................................................................. 11
P4: Advantages and disadvantages of using planning tools use in budget..............................11
TASK 4.................................................................................................................. 13
P5: Contribution of management accounting systems to respond financial issues....................13
CONCLUSION........................................................................................................ 15
REFERENCES......................................................................................................... 16
INTRODUCTION
Management accounting is an important function which are wholly liable to support
an organization by providing valuable information regarding financial or non-financial

transactions happened on daily basis. As there are various departments in an organisation
who are performed with an objective of achieving organisational goals thus they need to
provide support from accounting management in terms of providing them relevant data in
order to make profitable decision and suitable plans for the betterment of an organisation.
The present assignment report is based on Tech (UK) Ltd. which is exist in market to provide
special mobile telephone charger and other gadgets for retail outlets in the United Kingdom.
The project explains about the comparison between management and financial accounting
along with the essential need to management accounting in an organisation. The project also
includes various accounting and reporting systems along with advantages and disadvantages
of different types of budget. In addition with this, various financial tools to resolve financial
issues of company has been also discussed under this report (Abdel-Maksoud, 2011).
TASK 1
P1: Management accounting system and its essential requirements in Tech (UK) Ltd.
Management accounting:
It is form of management which is liable to provide valuable information to different
departments of an organization so as to make suitable decision and plans in order to achieve
desired goals and objectives within pre-determined time frame. They are helps responsible to
maintain financial reports which give true and fair information about financial position of
company to their shareholder and other interest parties.
Importance of management accounting
Management accounting are wholly responsible to record all financial as well as non-
financial transaction occurred on daily basis and prepare financial accounts on annual basis
so as to identify the actual financial position of company in market. Along with this, there are
other benefits as well which are received by Tech (UK) Ltd. such as:
Forecasting cash flows: With the help of different management accounting system,
the accounting managers are able to prepare different types of reports which help them in
estimating the inflow and outflow of cash within specified period of time. This will provide
an opportunity to management to execute business operations without fearing any shortage of
funds.

Appraisal of performances: Management accounting set standard for the employees
which are compulsorily required to achieve by the them after identifying their roles and
responsibilities. Analysing the performance of employees through comparing their actual
performance level with standard will bring motivation among employees to work hard and
achieve performance goals set by an organisation (Cheng, 2012).
Determination of rate of return: Management accounting recorded all business
transactions thus it help company in getting knowledge about the return they received in near
future on the amount they invested in particular business projects.
Comparison between Management and financial accounting
Management accounting Financial accounting
It helps in providing appraisal on the basis of
performance of different departments.
It helps in communicating the financial
performance of company.
It is more useful to make profitable decision
and polices in order to give advantage to
company.
It helps management in making corrective
decisions after finding out any deviations in
financial reports.
Various forms of budgets are prepared in
order to execute future project activities in
well manner.
Only focused on preparing financial budgets
to ensure having sufficient amount of
financial resources.
Different types of management accounting systems
Cost accounting system: The aim of using such accounting system by Tech (UK) Ltd.
is to identify the actual cost which will required to produce special mobile phone chargers
and other gadgets so that the management are able to arrange and manage financial resources
from different sources. Such accounting systems has classified into three types which are
given as below:
Actual costing Standard costing Normal costing
It includes overall cost
incurred in manufacturing
process. Such cost includes
material, labour and
It refers to setting target of
cost under which future
business activities are
profitability executed. It is
It refers to the process
through which company
identifying the amount
incurred in future production