Management Accounting: Definition, Types, and Significance

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
a)c...........................................................................................................................................3
i. Definition of management accounting. How it differ from financial accounting...............3
ii. Significance of management accounting information........................................................5
b) Explain the different types of management accounting information.................................6
Task 3...............................................................................................................................................9
P4 Advantage and disadvantage of different types of budget................................................9
P5 Balance score card approach...........................................................................................12
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

INTRODUCTION
Management accounting plays a significant role for the manufacturing Company as the
manager can effectively day to day operations. It can be used for the purpose of forward looking
through get the statistical and financial information. The research project is context to the Imda
tech limited used the management accounting information that helps them in attaining its goals
and objectives effectively. There is a mainly discussion on the definition of management
accounting and the difference among the financial accounting and management accounting.
Furthermore, the management accounting information as a decisions tool which gives various
advantages are the Make or buy decisions, Product costing and budgets etc. Thereafter, income
statement prepared on the basis of Marginal and Absorption costing techniques. There is a study
on Advantage and disadvantage of different types of budget. The end portion in which there is
description on Balance scorecard is an approach which is used by entities for measuring their
overall performance (Klychova, Faskhutdinova and Sadrieva, 2014). It evaluates the working on
the bases of four criteria such as financial, internal process, customers and learning or growth. It
evaluates the efforts of firm for the future improvement of organizations
TASK 1
a)c
i. Definition of management accounting. How it differ from financial accounting
Management accounting can be define in that it is a procedure in which the useful
information can be identifying, analyzing, measuring, interpreting and transfer data of
accounting that attain the company to reach its goal in effective manner. Thus, it can be used by
the manager of Imda tech limited to make their day to day decisions of business so, they can
carry out all the function in smoothly (Setthasakko, 2010). It is highly by the management for the
purpose of looking forward and it is used by the internal affairs. Thus, management accounting is
the important part of business units. Firms have to manage their operations well so that it can
sustain in the corporate market for longer duration. Competition is very high to survive in such
environment it is necessary to prepare a good budget. It can be prepared by looking upon income
and cost of the organization in particular fiscal year. It is highly by the management for the
purpose of looking forward and it is used by the internal affairs. Though it is difficult task but
this can help in identifying the sales volume and income of the organization. By this way

managers will be able to allocate the resources well. Zero based budgeting is effective tool, it is
not depended upon the assumptions so good results can be come out and organizations can
accomplish their objective easily. There is a vast difference among the financial and management
accounting that are described below-
Financial Accounting Management accounting
The financial accounting in which all the
financial transaction of a company through
tracking. Thus, adopting the standardized
guidelines for the purpose of record,
summarize and present a financial transaction
in a financial statement are income statement.
In the managerial accounting in that
management understand the accounting
information provisions for the concern to
inform themselves in better manner. It assists
the management to control the function and
perform better within the organisation.
It include all the type of information whether it
is financial and non- financial to the
management.
It includes only financial information
The main objective of financial accounting is
that to provide financial reports to the external
parties that are outside the organisation
The aim of managerial accounting is that to
provide the accounting information to the
internal parties or within the organisation
(Yalcin, 2012).
Financial accounting is based upon the
historical data of a company.
The management accounting is highly based
upon the looking forward.
It can be determined by the company’s
accountant through referring the financial
accounting standards (Scapens and Bromwich,
2010).
It can be computed that are reference to the
requirement of management that are use often
adopting the management information system.
In these financial accounting it generates the
reports that are relates to financial reports.
It provides the management reports that are
accurate and reliable both type of information
are financial and statistical information that are
needed by the management.
The financial reports of annual reports are
prepared at the end of accounting period for the
external stakeholders.
The management report generate on the
monthly as well as weekly basis for the chief
executive officer and department managers.