Introduction to managerial accounting accounting

MANAGEMENT
ACCOUNT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Part (A)...................................................................................................................................3
Part (B)...................................................................................................................................8
CONCLUSION................................................................................................................................9
TASK 2..........................................................................................................................................10
Part (A).................................................................................................................................10
Part (B).................................................................................................................................12
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting may be defined as a kind of accounting that is associated to the
preparation of the internal reports on the basis of monetary and non monetary information of
businesses (Christ, Burritt and Varsei, 2016). Due to help of these reports companies make
maximum use of available resources in an effective manner, this is why because of better internal
management. For better understanding of term management accounting Continental clothing
company Ltd company is selected. This company operates in the manufacture of cloths and
located in London. The project report is categorised into two tasks in which first task includes
different types of management accounting and methods of reporting along with planning tools.
On the other hand, second task contains preparation of income statements by help of marginal
and absorption costing. Apart from it, financial analysis of above respective company is done
whose objective is to provide detailed information to the management.
TASK 1
Part (A)
(A) Management accounting and types.
Management accounting: The term management accounting may be defined as a systematic
process of gathering and managing the available information about quantitative and qualitative
business transactions with an objective to produce internal reports (Jakobsen, 2012). As well as
this accounting is not a mandatory like other accounting. Though its role is wide in the context of
organisations because it acts as a guide for the managers to take futuristic decisions.
Management accounting system- This can be defined as a kind of accounting system which is
related to the preparation of internal reports with the help of available information of financial
and non financial transactions of companies.
Importance to integrate with organisation- It is mandatory for the organisations to align the
management accounting within process. Due to this systems and functions of companies can be
managed and arranged in an effective manner. For example in the above respective, continental
clothing limited company implements this accounting in their operations and activities for
making effective decisions on the basis of internal reports.
Origin, role and principle of management accounting:

 Origin- The origin of management accounting can be tracked from the technique of cost
accounting which evolved in England (Cooper, 2017). It was the time period of industrial
revolution.
 Role of management accounting- The key role of management accounting is to helping
managers of companies to develop a systematic framework to take suitable decisions. As
well as it is beneficial for providing all needed information related to finance and non
finance transactions.
 Principle of management accounting- There are some elementary principles of
management accounting which are essential to apply such as: Influence, relevance, value
and trust.
Difference between financial and management accounting:
Basis Management accounting Financial accounting
Information This kind of accounting includes
both types of information:
qualitative & quantitative.
On the other hand, under this only
financial information is included.
Reports Under this accounting, reports are
produced for internal stakeholders.
While in this financial reports are
prepared for internal and external
stakeholders.
Various types of management accounting systems:
 Cost accounting system- This accounting system is associated to the systematic
management of costs and expenditures of organisational activities with an aim to reduce
the costs. The cost accounting system is essential in the companies for tracking and
estimating total cost of various performed activities. In the above respective company,
continental clothing limited they are using this accounting system and it is helping them
in keeping an extra sight of eye on overall expenditures of manufacturing. Apart from it,
this accounting system estimates the futuristic cost of various operations and tasks of
organisations. On the basis of overheads can be allocated to the activities.
 Inventory management system- Under this accounting system, stored material of
companies are tracked in the term of quantity (Harrison and Lock, 2017). This stored