Managerial Accounting : Introduction
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Added on 2020-02-17
Managerial Accounting : Introduction
Added on 2020-02-17
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MANAGEMENT ACCOUNTING1
Table of ContentsINTRODUCTION................................................................................................................................3TASK 1.................................................................................................................................................3(A). (i). Managerial accounting, definition and distinguish between management and financial accounting........................................................................................................................................3(ii) Significance of management accounting information as a decision-making tool....................4(B) Explaining different types of management accounting system & its use by various departments......................................................................................................................................5TASK2..................................................................................................................................................8Calculation of net profit by adopting marginal and absorption costing techniques........................8TASK 3...............................................................................................................................................10P4) (a) Various types of budget and its characteristics/limitations................................................10b) Process of preparing budget......................................................................................................11c) Pricing strategies........................................................................................................................12Task 4..................................................................................................................................................12a) Explanation of balance scorecard and how it can be implemented can deliver a range of performance measure.....................................................................................................................12CONCLUSION..................................................................................................................................13REFERENCES...................................................................................................................................152
INTRODUCTIONThe process of analysis, examination, interpretation & presenting accounting basedinformation that has been measured through the preparation of financial accounting, reports andothers is called managerial accounting. It aids in business decisions for creating a right policies,daily operational management plans and others for the purpose of successful business. It helps inmeasuring organizational purpose, assessing business risk, resource allocation decisions and otherplans for the sustainable success. Imda Tech is a manufacturing organization that is involved inpreparing special chargers for the mobile and gadgets for the British retailers. In the recent meeting,different departmental managers have complained for the lack of monetary information in order toimprove their decision-making process. Thus, the proposed report herewith emphasizes onunderstanding and assessing the managerial accounting fundamentals i.e. financial accounting,budgeting, balance score card and costing techniques as well. With the help of this, Imda Tech’sdivisional managers will be able to make smarter decisions for achieving a long-run success. TASK 1(A). (i). Managerial accounting, definition and distinguish between management and financial accountingTo: Imdal, Line Manager From: Management Accounting OfficerDate: 9th April 2017Subject: Management accounting meaning and its difference from the financial accountingManagement accounting is regarded as a process which provides time-dated and accuratefinancial & statistical information to the managers for making regular short-term decisions. Unlikefinancial accounting which targeted at making annual corporate accounts to report externalstakeholders, MA focuses on generating weekly or monthly reports and informs the internalaudiences of the Imda Tech i.e. executives, departmental managers and others (Nuhu, Baird andAppuhami, 2016). The reports express the available cash balance, sales revenue, outstandingreceivables & payables, inventory & other required statistical information. The main objective of itis to enhance the business efficiency and thereby reach the organizational goals successfully. Difference between financial and managerial accountingDifferencesManagerial accounting (MA)Financial accounting (FA)Aim The target aim of the MA is to provideessential information to the internalusers, i.e. departmental managers,Unlike MA, it aims at deliveringrequired information to theoutsiders and external users i.e.3
executives, directors and others fortakinginformedorganizationaldecisions. shareholders, creditors, lendersand others to assist theirdecisions-makingprocess(Schroeder, Clark and Cathey,2016).Mandatoryrequirement It totally depends upon the manager’schoices and decisions without anymandatory regulatory requirement(Nuhu, Baird and Appuhami, 2016). Imda Tech Ltd owes mandatoryobligation to prepare their incomestatement, balance sheet andothers following accountingstandards and company law. GoverningprinciplesReports are prepared without anystandard base and can be constructed inany format as per the choice ofmanagement team. In UK, GAAP has been designedwhich all the entities needs toadhere with while making theirannual accounts. Time horizonImda Tech’s managers not only needs toprepare past reports also have to forecastthe future by making budgets. It is prepared for the historicalaccounting year. Audit There is no need for the business to audittheir reports by an independent audit toverify the truthfulness of it. Unlike MA, Imda Tech is legallyaccountable to audit their annualreports by CPA to verify itstrustworthiness and truthfulness(Picker and et.al., 2016). Confidentiality The reports prepared by the managerskeep fully confidential as they areavailable for the managerial use only. SOCI, SOFP and SOCF arepublicly published in order toreport the financial success to theexternalaudiences,thus,confidentiality is not maintained. (ii) Significance of management accounting information as a decision-making toolIt is important for the Imda Tech’s managers to get assistance of the strategic managementaccounting in order to make planning & decisions regarding the resource allocation, higherorganizational efficiency, exceeding sales performance and better short-term as well as long-termdecisions for ensuring sustainable growth. Now-a-days, in the complex and competitive industrialworld, MA becomes an important integral part of the firm, in which, managers not only targeted atmaximising internal business efficiency but also put focus on maximizing the staff productivity for4
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