Management Accounting of Tech UK Ltd
University: UKBC College London
Question :
- Explain the management accounting and its importance
- Presentation of financial information through managerial accounting reports
- Preparation of income statements using absorption costing and marginal costing methods
- Explain the types of budgetary control processes, types of budgeting tool and importance.
- Explanation of how management accounting help in solving financial problems.
Answer :
INTRODUCTION
Effective management and operations are the essential requirement of organisation in order to attain desired aim and objective of business (Bovens, Goodin and Schillemans, 2014). Management accounting is an internal part of organisation which helps to manage and operate the functions and operations of business in particular format. This report is prepared to analyse the essential aspect of management accounting. Management accounting system provides a structure to record the transactions and events in better way. Types of management accounting systems and reporting methods are defined in this context. Types of reports are provided in terms of helping and recording the data in effective and reliable manner. Tech UK Ltd is chosen organisation in which the role of management accounting is defined.
TASK 1
a) Explain the management accounting and the essential requirement of management accounting
Management accounting
Management accounting is a considered as a management tool which assists to prepare and manage in terms of day to day business transactions and short term managerial decision. There are types of information and tools are analysed in terms of making effective plans and management strategies in business. Management accounting is a concept which analyse the overall transactions and events happened during the year and summarise the information subject to determining the performance of organisation. Periodic reports and information are produced to managers and the accountants which helps to manage the operations and departments of organisation (Brewer, Sorensen and Stout, 2014).
AS per IMA (Institute of Management Accountants), Management accounting is a profession which remains involves in management decision making and developing plans and performance management system. It provides expertise in financial reporting and control to help the management in the formulation and implementation of an organisation's strategy. This is one of the essential aspect and important thing for determining the effectiveness of organisation. This basically helps managers and accountants to make business plans, effective management and operational strategies with effective management and operations. This is mainly associated with taking crucial decision and management (What is management accounting system, 2018.).
I. Distinguishing Management Accounting from Financial Accounting
There are significant difference found in management accounting and financial accounting which are defined as follows;
|
Basis |
Management accounting |
Financial accounting |
|
Concept |
There are types of management accounting system. There are types of principles and concepts are defined which helps to make vital plans for their upcoming events and projects. |
Financial accounting is a process of financial statements and information. Financial rules, principle and rules are analysed which are used strategies to make financial plans. |
|
Essential |
This is considered as an internal part of organisation which helps to record the transaction for better management and operations. |
There are significant needs are analysed to follow the managers and the making financial plans. Financial rules and principle assist the financial planning and presentation of financial plans. |
|
Purpose |
Assistance to managers and accountants to analyse the plans and making strategies for internal management and operation. |
Providing financial information and preparing financial statements are the prime objectives of organisation in respect of shareholder and stakeholders of organisation. |
|
Format |
There is no specific format and structure made to keep records and presenting information. Organisations can use structure as per their suitability. |
There are type of formats and structures are used by organisations to present financial Information enterprise to prepare financial transactions in more significant form. |
II. The importance of management accounting information as a decision making tool for
Department managers
Evaluation of effective information: there is a proper analysis and evaluation done in respect of produced information and data. These information are used to affect the decision making process and strategic planning. There are types of information which need to determine the implication affecting the profitability of an organisation.
Relevant costing analysis: cost analysis is also determined and analyse the important factors which remain associated with reducing cost and enhancing profitability of organisation. Relevant information are used to make decision and strategies.
III. Cost accounting systems
cost accounting system is mainly helps to determine the overall cost of production, manufacturing and functional cost. Minimise the cost and maximise profitability.
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