Unit 5 Assignment on Management Accounting
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Added on 2019-12-28
Unit 5 Assignment on Management Accounting
Added on 2019-12-28
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MANAGEMENTACCOUNTING
TABLE OF CONTENTINTRODUCTION...........................................................................................................................................................3TASK 1...........................................................................................................................................................................4P1 (a) (i) What is management accounting and differentiate between management accounting and financial accounting...................................................................................................................................................................4(a) (ii) Importance of management accounting............................................................................................................5P2 Describe the different systems of management accounting....................................................................................6TASK 2...........................................................................................................................................................................7P2 (i) Income statement under marginal costing-.......................................................................................................7(ii) Income statement of absorption costing-...............................................................................................................8TASK 3...........................................................................................................................................................................9P4 (a) Different types of budgets and their advantages...............................................................................................9(b) Process of preparing budgets.................................................................................................................................9© What are pricing strategies....................................................................................................................................10TASK 4.........................................................................................................................................................................11P5 How balanced scorecards can be used to resolve financial issues and developing effective strategies.................11CONCLUSION.............................................................................................................................................................12REFERENCES..............................................................................................................................................................12
INTRODUCTIONThis report is based upon tools and techniques of management accounting. Management accounting is an essential tool of every business organisation and its day to day operations. It helps in to measure the performance of company and provide necessary solution so as company can develop its market growth. Along with this, management accounting is totally differ from financial accounting, because financial accounting is make for an annual where management accounting is make for day to day and short term financial decisions (Kaplan and Atkinson, 2015). Further for this, it is also helpful in creating budgets and financial statements so as managers can easily analysis the actual position of company in capital market. Budgets are also useful provide the accurate and timely financial conditions of the company and it also assistive in where and how to spend money on business activities and functions. TASK 1P1 (a) (i) What is management accounting and differentiate between management accounting and financial accountingManagement accounting is the term that is helpful in provides accounting information to managers so as they can take better financial decisions, that is aid with their management and performance of control activities. Along with this, it is helpful in order to take day to day or short term financial decision for the betterment of business organisation. According to Institute of Management accountants, management accounting is a system of performance management which controls to assists the formulation of management functions and regulation of management strategy (Ward, 2012). In includes providing and preparing timely financial reports and statements to the managers so as they can easily forecasting forthcoming growth of Imda Tech. For a management accountant, it is very essential to he has a solid knowledge of accounting practise, that is essential for every business organisation. Due to this, management accounting is also called managerial accounting and cost accounting, that is totally differ from financial accounting, in that it produces financial reports for an organisation’s internal stakeholder as opposed to external stakeholders. So as management accounting is a combination of finance, management and accounting that involves real values of business techniques and skills in order to add real value for any business organisation. There is a difference between management accounting and financial accounting that is as follow: - Management Accounting Financial Accounting Management accounting refers to collate informationsuch as outstanding debts, cash flow and revenue, so that reports can be produces timely. It is also assistive in delivering statistical information, business decisions and day to day operations of management (Burritt, Schaltegger and Zvezdov, 2011). Financial accounting is helpful in preparing reports and it is usually based upon the past performance of manager; in line with reporting requirements.
It is a combination of financial information and non-financial information data in order to design a complete image of organisation. This is usually used in to drive business success. It provides the essential financial information that is used by others activities within the business, for example- departmental managers. The process of management accounting is preparing reports and profit and loss statements, in order to provide timely and accurate information to finance managers. And creates weekly or monthly financial reports for managers. Financial accounting reports are helps in creating annual business reports for any business organisations. In that, all accounting functions are involved. Management accounting is based upon assumptions, convention and various principles,assumptions like consistency, realisation, matching, materiality and going concern etc . It is able to be responsible for both quantitative and qualitative information’s and data as well that is being assessed and captured by accounting managers.(a) (ii) Importance of management accounting Management accounting plays a very essential role in growth and success of every business organisation. There is mention below the advantage as well as importance of management accounting, such as follow: -Reduces Expenses – Management accounting is helpful in reduces expenses by providing effective techniques for controlling damages and wastages. Along with this, in Imda Tech managers often use management accounting data and information in order to review the prices of economic resources and further business operations. So as, due to this information managers can easily analyse how much money, need to run their business. Management accounting is also helpful in conducting evaluation on the quality of economic resources that are used in producing products and services. So as the quality of overall product cannot be suffer by its cheap and lower prices.Improves Cash flow – Management accounting is also accommodating by improving cash flow of company so as managers can easily understand how much spend on business functions and operation. It is also helps in creating budgets; budgets are the important part of management accounting. Managers of Imda Tech, must have to used budgets so as they can maintain their annual balance sheets and financial reports as well. As along, the performance of organisation can be easily evaluated and managers can develop their strategic in order to improve the productivity of organisation. Management accounting enables the management in order to identify deviations amongactual cost and standard cost. Business decisions – It is also helps in taking day to short term business decisions so as managers can take risk in order to achieve growth and success. Sometimes it is very essential to take fast and quick decision for accomplishing goals and objectives. Management accounting also provides qualitative analysis for decision making process of Imda Tech, so as they can take effective and
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