Management Accounting System- Assignment

Added on - Dec 2020

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ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Section (A). Understanding of management accounting systems...............................................1Section (B). Methods used for management accounting reporting............................................4TASK 2............................................................................................................................................6Calculation of absorption and marginal costing from credible sources......................................6TASK 3............................................................................................................................................8Explanation of the advantages and disadvantages of different types planning tools..................8TASK 4.........................................................................................................................................10Compare how organisations and adapting management accounting systems to respond thefinancial issues..........................................................................................................................10CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting refers to a process of designing management accounts andreports that help in providing correct and timely financial and statistical data to the mangers ofthe company so that they can take day to day and short term decisions. It can be a type ofaccounting which help in offering financial and non financial data to the managers so that theycan help in the organisational development by taking suitable decision in context of the company(Bobryshev and et. al., 2015). Management accounting play an essential role in the inner orinternal management of a firm. This assignment is based on Excite Entertainment Ltd companywhich is a client of a leading accountancy organisation. This firm operating its business inpromotion of concerts, festivals at various locations of UK. In this report will be discussed aboutdifferent methods that can be used by the company for management accounting reporting.Further will be defined about the planning tools that can be used in management accounting forbudgetary control. Apart for it, financial problems will also be explained and income statementof Excite Entertainment Ltd will be defined.TASK 1Section (A). Understanding of management accounting systems(a) Difference between management accounting and financial accountingManagement accounting system- It can be explained as process of monitoring, dividingand analysing the monetary and non monetary data and information to maintain and manage theorganisation's functions.Financial accounting system- It refers to a type of accounting system that help indetermining the financial information of the organisation so that the management of the companycan design the financial statements for its internal and external functions(Gunarathne and Lee,2015).Comparison between management accounting and financial accounting systemBasisManagement AccountingFinancial AccountingLegal requirementThis accounting system is notmandatory to design. There arenot any essential or legal needof this accounting system.In each organisation, it isrequired and compulsory todesign it and it has a legalrequirement for the firm.1
Types of data usedThis accounting system useboth type of data such asmonetary of non monetary(Hopper and Bui, 2016).Financial accounting systemuse only financial informationto develop and design differentkind of documents.Format of demonstrationManagement accounting doesnot include any specific formatto display the reports.Financial accounting systemneeds to implement a specificformat to provide informationof financial statements.Domain of reporting withinthe firmThis accounting systemmonitor all the field of internalmanagement of theorganisation.This accounting systemdetermine both internal andexternal area of the firm.(a)Cost accounting system- It is a type of accounting system which is affiliated with theapproximation of the entire cost that generates during the process of products and servicesoffering. It includes various cost like process cost, direct cost, standard cost and others. In ExciteEntertainment Ltd., this accounting system can be helpful for calculating the overall cost in thepublicity of various types of occasions. The examples of cost accounting systems are asfollowing:Direct cost- It refers to those cost which can be instantly derived to a particular costcentre such as department, process, goods and others.Standard cost-It indicates to a type of cost accounting system which help in thedetermination of variances among actual and estimated costs. With the help of this accountingsystem organisations can monitor the level of difference among standard cost and actual cost.This accounting method help the firm in maintaining awareness about the difference of cost.(b)Inventory management system- It is a part of accounting system which consists followingof levels of inventory, sales, deliveries, orders and others. In Excite Entertainment Ltd., themanagement of the company follow this accounting system so that they can negotiate theirvarious media assets and can monitor the demands of buying new appliances regarding eventsand festivals(Kaplan and Atkinson, 2015). The concept of this management system can beanalysed by FIFO and LIFO methods. FIFO explains that stock which comes first in the store2
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