Management Accounting with Essential Requirements and Types

MANAGEMENT
ACCOUNTING
Sollatek (UK)

Management accounting with essential
requirements with its types
 Management accounting is referred as presentation of accounting information for purpose of
formulating policies adopted through management to assist its regular activities.
 In simple state, it helps management to perform its roles such as organising, planning,
staffing, controlling and directing.
 According to J. Batty, it is term used for describing accounting techniques, methods and
system along with special capability and knowledge for assisting management in task for
increasing profit and reducing losses.
 In the similar aspect, Institute of Charted Accountants of Wales and England states that it is
form of accounting as it enables business to be conducted in efficient manner as management
accounting.
 Further, R.N. Anthony states that management accounting is directly concerned with
accounting information which is very useful for management.

Principles of management accounting
 Influence: : Communication gives insight which is highly influential as it begins and
end with conversation. It raises decision making through communicating all insightful
information which allows eliminating silos and directly facilitates integrated thinking.
 Relevance: Information is relevant as it scans the best available resources of
information which is highly relevant for decision required to undertaken along with
application of decision style and process. There is requirement of attaining proper
balance among internal and external, past, present and future related and financial and
non financial information such as social and environmental issues.

Principles of management accounting
 Value: There is analysis of impact on value as management accounting links strategy of
business model and need of through understanding of broader macroeconomic
environment. It involves to analyse information with evaluating opportunities, value
generation path and to lay special emphasis on costs, risk along with value generation
of potential of its opportunities.
 Trust: Trust has been build through stewardship. Scrutiny and accountability forms
process of decision making in objective manner. The short term commercial interests
which is against long run for stakeholders which will enhances trust and credibility.

Types of management accounting system
 Cost accounting system: This system is referred as process of classifying,
summarizing, analysing, recording and allocating costs linked with process and to
develop different course of action for controlling system.
 Its objective is to advise management for optimising business processes and practices
on basis of capability and cost efficiency in Sollatek (UK). Generally, it is used through
manufacturers for tracing activities of production with application of perpetual
inventory system.
 In simple words, this accounting system is framed for manufacturers which traces
inventory flow on continual aspect via multiple production stages.

Need of cost accounting system
 It analysis profitability of individual services, jobs, products and various operations or
department.
 The prices have been set for covering cost and produce an acceptable level of margin.
 The delegation of responsibility has been facilitated for significant task and employee
rating as well.
 The operational efficiency and cost reduction raises which will help customers for price
deduction.