Management Accounting and Systems: A Comprehensive Study

Management
Accounting

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Description of management accounting and requirement of different systems of it..............1
P2 Various methods which are used for management accounting reporting...............................4
M1 Benefits of all the management accounting system and their application in the
organisational context..................................................................................................................5
D1 Evaluation of integration of all management accounting systems and reporting with
organisational process in critical manner....................................................................................6
TASK 2............................................................................................................................................6
P3 Calculation of costs with the help of marginal or absorption costing....................................6
M2 Application of range of techniques and production of financial reporting documents.........7
D2 Interpreting the data generated for range of business activities.............................................8
TASK 3............................................................................................................................................8
P4 Types of planning tools used in budgetary control................................................................8
M3 Different planning tools and their application for budget forecasting..................................9
TASK 4..........................................................................................................................................10
P5 Comparison of usage of adoption of management accounting systems for companies to
deal finance related issues.........................................................................................................10
M4 Response of management accounting to the organisations to attain sustainable success...12
D3 Evaluation of usage of planning tools to deal with financial challenges.............................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is a framework which is focused by enterprises to make sure
that the operational activities which are performed by them during the year. It provides advice to
the managers to make strategies for development of business and achieve long term objectives.
With the help of this technique it can be determined that the internal records which are kept by
employees are appropriate or not (Campanale and Cinquini, 2016). Main purpose of this report is
to enhance knowledge about management accounting and various components of it. Deloitte is
one of the leading accountancy firms and one of its main client is Excite Entertainment Ltd.
which is operating business in entertainment industry in UK. Present report is based upon this
company and the major activities of it are promotion of concerts and festivals.
This project covers various topics such as detailed analysis of management accounting,
different systems and reports of it, various techniques that are used to calculate costs under it etc.
Apart from this, budgetary control, different planning tools with their disadvantage and
advantage and comparison of two organisations on the basis of use of management accounting
techniques to deal financial issues are also covered under this assignment.
TASK 1
P1 Description of management accounting and requirement of different systems of it
Management accounting: In all the organisation a specific process is followed to
analyse that the plans which are formed for betterment of organisation are resulting favourably or
adversely is known as management accounting. In Excite Entertainment Ltd. managers follow it
to assure that organisation will grow in future with the help of current strategies which are
formulated by them.
Financial accounting: It is the technique which is focused by accounting professionals
of companies to keep track record of all the finance related transactions. In Excite Entertainment
Ltd. management guide all the employees to form all the financial records properly so that they
can monitor that company is generating profits or loss and it is having sufficient liquidity or not
(Chiwamit, Modell and Scapens, 2017).
Difference between management and financial accounting: There are various
differences in management and financial accounting which should be focused by all the
companies. All of them could be analysed with the help of following table:
1

Basis Management accounting Financial accounting
Legal
requirement
There is no legal requirement of
management accounting for
companies because it is not audited
and prepared by managers to analyse
performance of business.
There are specific legal
requirements for financial
accounting because with the help of
it external stakeholders can
determine financial status of
company.
Format of
presentation
There is no specific format for
conducting management accounting
and keeping records of it.
According to IFRS it is very
important for companies to follow
specific format for financial
accounting in which they have to
form profit and loss account,
balance sheet and cash flow
statement.
Area of coverage It covers all the non financial areas
and record information of all of them
to generate reports.
Only financial areas are covered by
it in which information regarding all
the transactions which have taken
place in financial terms.
Types of data
used
Only non financial data is used in it to
formulate all the records.
Financial data is used to generate all
the final accounts.
Management accounting system: It can be defined as the internal system which is used
by most of the companies for the purpose of evaluating and monitoring all the direct and indirect
process of business to determine actual position of the company. In Excite Entertainment Ltd.
Some specific systems under management accounting are used by managers. Detailed analysis of
them is as follows:
Cost accounting systems: These are the set of frame works which are focused by large
as well as small business entities for the purpose of analyse actual cost related to the operations
of company. In Excite Entertainment Ltd. these are utilised by managers to determine that the
operational activities are able to generate profits and enhance profitability by assessing the cost
of them (Christ and Burritt, 2017). It is required for the company to use it because with the help
2