This presentation provides an overview of management accounting systems and techniques. It covers the principles, methods, and benefits of management accounting, as well as its role in organizations. Topics include variance analysis, cost schedules, budgets, and more.
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Accounting1 Management Accounting
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Accounting2 Slide 1: Introduction This presentation is designed for facilitating knowledge about management accounting systems. Thefocusofthispresentationisalsoonapplicationofthemanagementaccounting techniques used in different organizations. This presentation also covers the understanding about principles of management accounting. Moreover,itprovidesroleandimportanceofmanagementaccountingsystemsand management accounting. In addition to this, the presentation emphasizes on usage of different management accounting techniques for key calculations required for income statement. It is also helpful in understanding the integration of management accounting in a business organization. Finally, the presentation is helpful in understanding benefits of different functions of the organization. Slide 2: Management Accounting Management Accounting: Managementaccountingcanbedefinedasthebranchofaccountingandfinancial management that deals in study and evaluation of financial data of company in order to evaluate financial performance of company and also to provide appropriate advice to company(Blackwood,2014).ManagementAccountingdealsinidentification,analysis, interpretation and presentation of key accounting information in different organizations. Management accounting is highly helpful to the managers in companies while taking major business decisions for the company and while designing organizational policies. Different Types of Management Accounting Systems: Example of different management accounting systems involves price optimizing system, inventory management systems, cost accounting systems and the job costing systems. One of the applications of management accounting system is measurement of performance. The performance of employees is done through comparison of actual performance against the standard performance(Blackwood, 2014). Management Accounting system is also helpful to the managers in allocation of resources in different business activities. Slide 3: Methods of Management Accounting Reporting Variance Analysis Reports: Under this method, the variances are calculated and reported by comparison of actual performance of company against standard or budgeted performance benchmarks. Example of
Accounting3 different elements, which are taken into account for study are revenue, selling price per unit, direct labour overheads, direct material overheads, fixed overheads etc(Maheret al., 2012). Variance analysis reports are highly beneficial to evaluate performance of a company. Cost Schedules: Cost schedule is also a major document that is helpful to understand cost schedules associated with different business expenses in company. Budgets: Budgets are also major type of management accounting reports in different organizations. Different types of budget reports are visible in organizations such as sales budget, marketing budget, production budget etc(Maher et al., 2012). Accounts Receivable Ageing Report: These reports are mainly produced in business for the effective management of receivables in a company. Slide 4: Calculation of Costs to Prepare an Income Statement Slide 5: Income Statement Under Absorption Costing
Accounting4 Slide 6: Principles of management Accounting Following are four major principles of the management accounting that should be followed by every organization: Influence: According to principle of influence, communication plays a very vital role in presenting the insight that is highly important in business. Communication is required from starting to end phase of the management accounting (Cairney et al., 2011). It also empowers the decision- making procedure of managers through better insights about key accounting details. Relevance: According to this principle, all the required and relevant information is presented before different stakeholders of the company at the time of need. At the same time, all the information provided by management accountants should be relevant and pertinent for decision makers. Value: According to this principle, the management accounting evaluatesimpact of different strategies and strategic decisions of the company on value(Jones, 2015). Scenario analysis is also taken into account for better decision making. Trust: Trust principle states that Stewardship builds the trust. According to this principle the decision-making process in organizations can be made more objective through components of scrutiny and accountability. Trust and credibility can be enhanced through balancing of stakeholder’s long-term value and the short-term commercial interests. Slide 7: Role of Management Accounting and Management Accounting Systems Managementaccountingandmanagementaccountingsystemsperformtheroleof stewardship.Ithelpsindevelopingtheframeworkforcostandfinancialaccounts.
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Accounting5 Management accounting system is also helpful in operational and routine financial decision making. Management accounting system also helps in the short term and long-term planning within an organization. There is also vital role of management accounting in prediction of future economic events or business events. Management accounting is also highly beneficial in designing optimal capital structure for the company. Optimal capital structure is that capital structure, which comprised of lowest financial cost for company. Management accounting is also helpful in control mechanism due to availability of variance analysis technique in the hands of management accountants. Slide 8: Integration of Management Accounting in an Organization Integration of management accounting in seen in different organization in the form of development and usage of big data analytics management system. In addition to this, the management accounting is also integrated with the accounting information systems and database management systems within an organization. The integrated database management approach is adopted by organization for high operational efficiency and better decision making at the time of need. Slide 9: Benefits of Management Accounting Functions to Organizations The benefits of management accounting function are visible in organizations in the form of capitalbudgetingdecisions,adoptionofoptimalcapitalstructureetc.Management accounting is also helpful in effective planning of different factors like cost volume and profit in organizations. One of the most important benefit of this function in evaluation of financial performance of company and taking better actions accordingly(Smith, 2017). Management accounting focuses on adoption of scientific forecasting of budgets that ultimately contributes in increasing production or output within the organization. Slide 10: Conclusion On the basis of above presentation, it can be summarized that there are different types of management accounting systems such as price optimizing system, inventory management systems, cost accounting systems and the job costing systems. There are different principles of management accounting such as relevance, value, trust and the influence. Example of different roles and benefits of management accounting involves optimal capital structure decisions, cost-volume profit analysis, scientific budget forecasting, evaluation of financial performance and better control through variance analysis technique. Slide 11: References
Accounting6 Blackwood, N. (2014)Advanced Excel Reporting for Management Accountants.USA: John Wiley & Sons. Cairney, C.T.,Chivaka, R. and Fourie, H. (2011)Principles of Management Accounting: A South African Perspective.UK: Oxford University Press. Jones, S. (2015)The Routledge Companion to Financial Accounting Theory.UK: Routledge. Maher, M.W., Stickney, C.P. and Weil, R.L. (2012)Managerial Accounting: An Introduction to Concepts, Methods and Uses.USA: Cengage Learning. Smith, S.S. (2017)Strategic Management Accounting: Delivering Value in a Changing Business Environment Through Integrated Reporting.USA: Business Expert Press.