Differences Between Financial Accounting and Management Accounting
The purpose of this report is to discuss principles of and similarities and differences between financial and management accounting and to highlight how management accounting could be used to improve TVD’s performance. In particular, one of the management accounting techniques, benchmarking, is used as an example of how MA can help a business to run successfully.
Today, accounting is an important aspect of business. The primary idea is to present financial and non-financial information so that the company can make good decisions and succeed financially. In other words, for a business or organisation to be able to communicate and exist there is a demand of accounting.
There are two main types of accounting: financial …show more content…
Description of management accounting technique: Benchmarking
As described above, management accounting has many advantages as a complement to the financial accounting system. Therefore, it is recommended that TVD adopt more management accounting techniques to improve its chances of success. In this report, benchmarking will be used as an example of how these techniques could help to improve TVD’s performance. Although still unfamiliar to many people, benchmarking is one of the most powerful techniques within management accounting. It is also particularly relevant in the context of TVD’s business concept.
The main idea behind benchmarking is to make comparisons between the own company and other organizations that have a high performance rating. This provides a chance to study the “best practice” and adopt ideas for how to improve performance and increase profit. According to Drury (2008, p.14) it “represents the ideal way of moving forward and achieving high competitive