Management accounting

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
SCENARIO 1...................................................................................................................................1
Section A – Understanding Management Accounting Systems..................................................1
a) Differences between Management & Financial accounting. ........................................1
b) Cost Accounting Systems..............................................................................................2
c) Inventory management systems ....................................................................................3
d) Job Costing Systems .....................................................................................................4
e) Benefits of Management Accounting Systems .............................................................4
Section B : Methods used in management accounting reporting.................................................6
a) Different management accounting reports....................................................................6
b) Information made available to the users should be relevant, accurate and reliable to the
user.....................................................................................................................................8
c) Evaluating management accounting systems and reports to be integrated in Excite
Entertainment Ltd operational process. ............................................................................8
SCENARIO 2...................................................................................................................................9
Comparison of profit or loss under different cost accounting techniques. .................................9
SCENARIO 3.................................................................................................................................11
Part A ........................................................................................................................................11
Comparing and contrasting planning tools used in management accounting. ................11
Part B ........................................................................................................................................12
Comparing the ways in which financial problems can be dealt and can be prevented. . 12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Accounting refers to the process of recording the financial of the business. Accounting
process deals with making summary, analysis and reporting the transactions to the regulators,
oversight agencies and the tax authorities. Financial statements prepared in the accounting are
the brief summary of the financial transactions carried by the organization represent the
operation of business and its position. There are different types of accounting that has been used
for different accounting purposes within organization. Financial accounting (FA) and
management accounting(MA) are the two accounting that are mostly in practice and is used by
most of the organizations. Present report will reveal about the management accounting. It will
include the difference between MA & FA, other accounting systems will also be explained. It
will provide knowledge about the different methods use in the management accounting and
reporting. It will also involve the understanding about the planning tools use in management
accounting for ensuring financial performance and stability. Different management accounting
with the use of numericals will also be explained in the present report. Project will be providing
detailed information and understanding about the management accounting.
SCENARIO 1
Section A – Understanding Management Accounting Systems
a) Differences between Management & Financial accounting.
Management accounting
The accounting is also called managerial accounting. It is an accounting used by the
managers for helping the management of organisation in formulating the policies and
procedures, forecasting, in planning & controlling routine business operations carried out by the
organisation(Cokins and Dybvig, 2018). Management accounting captures both qualitative and
quantitative information. Management accounting is not limited over providing the costs or
financial informations only. It is also used in extracting the material and relevant informations
from cost and financial accounting for setting goals, budgeting, decision making and like
activities.
Financial accounting
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The accounting system deals with preparation of the financial statements for outside
parties like shareholders, creditors, suppliers, investors etc. It is purest accounting form having
proper record of every transaction and reporting the financial data for providing the material and
relevant information for users. It is based over various assumptions, conventions, principles like
materiality, going concern accrual, consistency etc.
Key differences between the accounting methods.
 MA keeps record and reports about both financial & non financial informations of
enterprise. FA deals only with keeping track records of all financial information related
to an entity.
 Financial accounting information is used by both internal management as well as
external parties, where the management accounting information is only relevant for
internal management of company.
 Management accounting is for internal use of enterprise therefore very confidential,
where financial accounting is prepared for public use.
 Management accounting prepared reports considering monetary as well as non monetary
information like number of staff, raw material consumption and sale etc. On the other
hand financial accounting deals only with monetary information in its reports.
 Management accounting is focused over providing information for helping the
management in performance evaluation and decision making for future. Financial
accounting is focused over providing information to the users about functioning of
company.
 Financial accounting is done over specific periods where management accounting as per
the requirement of management.
 Financial reports are prepared after the transactions or events are occurred where the
management accounting is done at both times prior for preparing budgets and after the
production to analyse the performance and variations.
b) Cost Accounting Systems
Cost accounting deals with examining the cost structure followed in business. This is
done by collecting the information of costs which are incurred by activities and operations of
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