Introduction
Management accounting is the process of preparing management reports and accounts that provide accurate and timely financial as well as statistical information required by managers. It is the necessary for the company to manage the functions in a better manner. Management accounting is the overall scenario which helps company to make financial accounting system. Present report will be based on management accounting of Tech UK limited who is produce special charger for mobile telephone and other carry on gadgets for retail outlets in the UK. This report will be based on how company manages their financial resources in a productive manner. Through they enhance the better opportunity growth. Further, assignment will discuss about essential requirements of management accounting system which help to distinguish management accounting information as a decision making tool for department managers. It will explain about the importance of cost accounting system as well. Inventory management systems, job costing. Moreover, it will describe the essential aspects of management accounting system.
Task 1
P1. Explaining management accounting and essential requirements of management accounting system.
Management accounting system is the basic and necessary system to manage the company’s financial resources in a systematic manner. Focus of financial accounting is on the preparing information for external parties such as stockholders, public regulators and lenders. Besides, management accounting system is based on some essential principles which help company to develop the reports for internal and confidential use by managers for decision making and identifying ways to run company efficiently (Ax and Greve, 2017). Moreover, it enables Tech UK limited to make product costing, trend analysis and forecasting as well as market constraints.
Distinguishing Management Accounting from financial accounting
Similarities: Both; financial and management accounting system are the part of accounting information system. Accounting systems enable company to analyze its financial statements and take the suitable decision making approach. Another similarities between both of them is they are economic events are dealt in both system accounts. Financial accounting has given more new challenges and opportunities to adopt new portfolio of investment (Bromwich and Scapens, 2016). Besides, management accounting is the system that manages those systems on certain principles. Besides, another similarities between management accounting and financial accounting is both the terms are equally concerned with financial statements, revenues, expenses, assets, liabilities and cash flow (Fayard, 2015). Both determining and measured of costs for different accounting periods and even for different departments and sections.
Differences:
|
Basis |
Financial Accounting |
Management Accounting |
|
Accounting Method |
Financial accounting follows the double entry accounting method while entering the business transactions such as transactions, summarizing, recording, etc (Fullerton, Kennedy and Widener, 2014). |
Management accounting system only manages the system. It is not based on any double entry system. |
|
Accounting Principles |
Financial accounting system adopts Generally Accepted Accounting Principles (GAAP) |
(GAAP) is not important for management accounti |
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