Management Accounting and Reporting Methods

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Management accounting and the requirements of management accounting systems. .........1
P2 Management accounting reporting methods...........................................................................3
P3 Cost calculation using the appropriate cost analysis techniques. ..........................................4
P4 Types of budgetary planning tools used in organisation. ......................................................6
P5 Comparison of organisations adapting the management accounting methods for responding
to the financial problems..............................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting is defined as the practice of identifying, analysing, measuring,
interpreting and for communicating the financial information’s to the managers for pursuing the
organisational goals. It is different from that of financial accounting as it is for the internal use to
managers where the financial reports are for outside parties. Present report is based on Tesco in
in which management accounting will be discussed such as management accounting systems
their benefit to organisation and how it can be applied in the organisation. It will also be
providing understanding on management accounting reporting methods and different costing
techniques used for reporting. Study will further cover the planning tools used in management
accounting and the methods for solving the financial problems of company.
LO1
P1 Management accounting and the requirements of management accounting systems.
Management Accounting
It is also referred as managerial accounting. Management accounting deals with
providing information related to financial and other resources that help the company in process
of decision making. The management accounting provides information that is important for the
internal management for controlling the costs effective management of resources. Objective of
management accounting is to deal effectively with statistical data for making accurate and better
decisions for developing the business by effectively managing the resources.
Functions of MA
 Assists in making forecast about future.
 Helps in forecasting cash flows.
 Provides assistance in analysing returns and setting strategic direction.
 Helps in understanding performance variances effectually and taking strategic action
within suitable time frame.
Difference between management and financial accounting
Basis of difference Management accounting Financial accounting
Meaning It is concerned with providing
suitable information to the
managers that contributes in
It emphasizes on the
preparation of financial
statements which in turn
1

developing plans, policies and
strategies for the near future.
assists interested parties in
decision making.
Stakeholders Only internal management
team undertakes MA reports
for strategic decision making.
For the purpose of decision
making both internal and
external parties use financial
reports.
Time period Reports are prepared as per
the requirements weekly,
monthly, fortnightly etc.
Accounting reports are
prepared and presented
annually.
Format No specific format followed
for managerial reports.
Companies are obliged to
prepare financial referring
specific rules and format such
as IFRS, GAAP.
Information Includes both monetary and
non-monetary information
Furnishes only monetary
information for evaluation.
Management accounting systems
Management accounting systems helps Tesco to manage its business operations
effectively achieving the growth of business.
Inventory Management System
Inventory management systems refers to the system where inventory is required to be
ordered, stored and its use in the processes. It includes management of raw material,
components, finished products and the assets of company. It is very useful for Tesco as it is
having complex supply chains process as it deals with number of products. Inventory
management systems helps company to deal effectively with the inventory of company. Tesco is
using technology and software systems for managing its stocks (Maas, Schaltegger and Crutzen,
2016). It has established the method in warehouse its stores to keep proper record of its
movement within and outside the organisation. Inventory management has helped management
in taking steps related to the effective management of all the company stocks. Using the
inventory management makes forecast about its future requirement of the production based on
2