OFFERS Buy 4 assignments and get 1 absolutely FREE!
Search
25% off
+
FREETurnitin
report

Prices from

£7.41

£5.56
Safe & Trusted

INTRODUCTION

Management accounting also known as managerial accounting is a system which helps to analyze the business costs and helps in preparing financial reports for achieving the target for the company. It gives accurate and timely financial reports of the company. These reports generally shows the budget of the company, revenue generated from the products raw material stock, outstanding debts, etc. This report will focus on the management accounting system of Tech (UK) Limited, like they are producing charger for mobile telephone and other carry-on gadgets for the retail outlets in UK. In this report we will discuss about the management accounting of the company, and why there is an essential requirement of management accounting system. This report will also be discuss different types of management accounting, difference between management and financial accounting, types of systems like cost accounting, inventory management and job costing system and types of managerial accounting.

TASK 1

P1. A) Explaining management accounting of management accounting system:

1) Distinguishing Management Accounting and Financial Accounting: Key difference between management accounting and financial accounting are:

Points

Management Accounting

Financial Accounting

Definition

Used by the managers of the company to evaluate the companies operations to plan strategies and make relevant decisions.

The company is concerned with the stockholders and other company outside the organization.

Objective

To manage the company by giving new ideas for planning.

Providing Financial information

User

Within the company i.e. internal (Hilton and Platt, 2013)

Both internal and external parties.

Regulatory Requirements

Non-mandatory

Mandatory

Rules

Does not have to follow any rule

Have to follow GAAP ( Generally Accepted Accounting Principles)

rule

Reports

These generally focuses on the detailed analysis of company's profile.

They make reports on the company's financial position (Ward, 2012).

 

b. Importance of management accounting information as a decision making tool:

Process of preparing reports on the accounts and management of the company giving the information regarding financial and statistical status is known as management accounting. It plays a very important role in taking long-term decisions for the company. It helps managers with decision making. It uses varies tools and plans in strategic decision making. It helps the department managers in many ways, such as:

  • Preparing future plans: Before applying any plan to action the manager should understand the present and future scenario of the company. Management accounting helps to answer the questions which arise during the planning and forecasting the future trends in business.
  • Increase Efficiency of the business: Having planned strategies will have the management to increase its efficiency in the business (Parker, 2012).
  • Understanding Performance Variances: It is defined as variances between what is planned and what actually achieved. Management accounting helps to build positive variances using analytical techniques.
  • Helping in Forecasting Cash Flow: Management accounting helps in designing of budgets and trend charts for the company which the manager can use to plan how the company's money and resources are going to be used to generate good revenue growth of the company.

c) Cost accounting systems:

A cost accounting systems is a system in which the company estimates the cost of their products by checking the profitability by evaluating cost control of the company. The company should have the knowledge of which product is profitable for them (Salvo, 2015). Cost accounting systems works by summing up the total labor, material and overhead costs to the company. Different types of cost accounting systems are there