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Introduction

Management accounting field lays on analyzing business costs and operations on a periodical basis. It focuses on recording as well as evaluating data set and thereby prepares report which in turn contributes in the managerial decision making. Tools and techniques of management accounting provide high level of assistance in planning, controlling, monitoring and enhancing performance. In the current times, management accounting tools are widely used by the business unit for gaining competitive edge over others. The present report is based on the case scenario of Tech Ltd which manufacturers special chargers for mobile phones and other electronic gadgets. In this, report will describe requirements of management accounting system in the organizational context. Further, it will also shed light on the level to which managerial reports serve valuable information to the managers for decision making. Further, report also entails how absorption and marginal costing system helps in assessing cost and profit. In this, manner in which accounting techniques aid in planning and sustainable success will also be presented.

Task 1

a. Defining management accounting and its essential requirement

Management accounting is the process which includes wide range of activities such as identification, measurement, analysis, interpretation and communication of information. In the context of business unit, MA is highly significant as it provides accurate and timely information to the managers for short-term decision making. Management accounting systems may be served as a confidential reports related to the internal operations which in turn aid in business decisions and thereby overall growth. Tech Ltd can attain success by taking into account different types of management accounting systems.   

1. Difference between management and financial accounting

            Both management and financial accounting is the main parts of finance but significant difference takes place between such two in the following manner:

Basis of difference

Management accounting

Financial  accounting

Concern

It assists management team in making effective decisions about business.

FA focuses on classifying, analyzing, recording and summarizing financial affairs associated with the business unit.

Application

MA helps in taking effectual steps and strategizes business operations.

It helps in presenting accurate and fair view of financial affairs.

Scope 

It has wider scope

Scope of FA is pervasive but not as wide as MA.

Measuring grid

It measures and renders information about both quantitative and qualitative aspects (Dekker, 2016).

FA provides information about quantitative aspects.

Decision making aspects 

In this, both historic and predictive information is considered as a basis for decision making.

Under FA, historic information is recognized as a basis of decision making.

Statutory  needs

No statutory requirement takes place in MA pertaining to the preparation of reports or accounts.

On the basis of legal aspects   final accounts must be prepared by all the business units.

Format

No specific format is followed or the preparation of accounts and presenting information.

It  includes specific format for recording and information presentation.

Reports used  by

Management team  of the organization

All the stakeholders include shareholders, customers, management, supplier etc.

 

2. Significance of management accounting information for the managers as a decision making tool

Management accounting implies for the process in relation to preparing accounts and reports which furnish statistical & timely information for decision making purpose. MA assists managers in taking both long as well as short term business decisions and thereby helps in meeting goals. MA contributes significantly in the organizational growth and assists in building competitive edge over other. In the context of Tech Ltd, significance of MA can be presented as a decision making tool in the followi

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