Management Accounting and Systems

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Explanation of management accounting and its systems......................................................1
P2: Methods used for management accounting reporting............................................................2
TASK 2............................................................................................................................................4
P3: Determination of costs using appropriate techniques............................................................4
TASK 3............................................................................................................................................5
P4: Advantages and disadvantages of planning tools..................................................................5
TASK 4............................................................................................................................................6
P5: Comparisons of organisations on the basis of adoption of management accounting systems
......................................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Management accounting is referred as managerial accounting and is helpful for managers
by providing them crucial information to aid them in decision-making process (Alomari and
et.al., 2018). It helps the management in preparation of various reports which can help them in
developing strategies for future. In this report, GSQ Ltd. has been considered which is a
company based in United Kingdom. In this project, analysis will be made on demonstration of
understanding of management accountant systems, application of range of techniques,
explanation of use of planning tools, comparison of ways in which organisations can use
management accounting systems.
TASK 1
P1: Explanation of management accounting and its systems
Management accounting systems are used to provide information to the managers and to
aid in operations of the firm. In the context of GSQ Ltd., it can be used for helping in managing
costing of the processes.
Types of management accounting systems- Different types of management accounting
systems are used by companies for their varied requirements according to their nature of business
(Beuselinck and et.al., 2019). GSQ Ltd. uses cost accounting system and inventory management
system.
Cost accounting system- This is used by organisations for finding out the costs of their
products using its different tools like profitability analysis, inventory valuation and cost control.
This is helpful to reduce the costs and maximisation of profits. As GSQ Ltd. is a manufacturing
firm it can use this system for analysing the excessive costs in its manufacturing processes and
decreasing them for increasing its level of profitability.
Benefits-
 Using this system activities can be classified into profitable and unprofitable which will
therefore help GSQ Ltd. to find unprofitable activities.
 This system helps in controlling the cost of materials which is very much helpful for a
manufacturing firm like GSQ Ltd.
Essential requirements-
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 The cost accounting system should be simple and practical to use. It is so because a
complex system can create problems for the company.
 The data used in the system must be accurate. This is essential because it will give the
results as required by the enterprise. Inaccuracy of data can result in wrong interpretation,
variances and deviations.
Inventory management system- Inventory management system uses technology as well
as other processes for monitoring the level of stock in the company (Cord, 2018). GSQ Ltd.
which is a manufacturing firm can use it for tracking its level of materials and for determining
their right usage.
Benefits-
 It helps in development of better forecasting abilities as GSQ Ltd. can effectively use it
for predicting its stock level. It can therefore manage its inventory in a better manner for
optimum efficiency.
 It ensures better transparency in usage of materials which can help GSQ Ltd. in
monitoring and controlling activities. It helps the firm in knowing the movement of
materials and keeping a track on it.
Essential requirements-
 A good inventory management system should facilitate management of suppliers. It
should facilitate the company to prepare their lists for maintaining records.
 An effective inventory management system must manage the orders. This is needed so
that they can be completed on time.
P2: Methods used for management accounting reporting
Management accounting reports- These reports are used by managers of a company for
the purpose of planning, decision-making and regulating performance (Din and Habibullah,
2017). Management of GSQ Ltd. can use them for taking important decisions for the benefit of
the firm. GSQ Ltd. primarily uses Accounts receivables ageing reports and cost managerial
accounting reports.
Accounts receivables ageing reports- It is a report which lists out those debtors and
customers who haven't paid their dues to the firm (Types of managerial accounting reports,
2019). It makes lists using different ranges depending upon the date of debt. It can be used by
GSQ Ltd. to find out unpaid amounts not yet received by it.
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