Management Accounting - A&R Cambridge Ltd Assignment

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P 1 Explaining management accounting, management accounting systems and their
requirements in the company ......................................................................................................1
P2 Methods used for management accounting report..................................................................3
P 3 Preparing income statements using marginal and absorption costing techniques of
management accounting...............................................................................................................4
P 4................................................................................................................................................8
Case 4.........................................................................................................................................10
P 5. Comparing different management accounting system used for resolving financial
problems.....................................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
A provision made of the set of numerous financial information of the company for the
purpose of using it in the business organisation and helping its managers for the development
purpose is nothing but a management accounting. It can also be defined as a process of analysing
internal performance of the company and summarise them in an effective manner so that
managers could easily analyse the actual performance and formulate their plans and strategies for
the business in more effective manner. A&R Cambridge Ltd. is a medium szized manufacturing
company of England. it was established in 2017. The present study shows a report explaning
detailed information about overall management accounting system, its requirement in the
company along with major difference of management accounting system with financial
accounting.
In addition, the study also shows an explanation regarding different types of planning
tools of budgetary control system and their critical analysis. It provides details regarding
numerous types of management accounting system that can be used by the various business
organisations in order to develop strength of the company in responding to various financial
problems arise in the company. In addition, a part of the present assignment also shows some
practical financial problems solved with the help of appropriate techniques of management
accounting system.
LO 1
P 1 Explaining management accounting, management accounting systems and their
requirements in the company
Management accounting
The term management accounting can be described as a range of methods used in the
management of numerous monitory and non monitory activities relating to financial performance
of the company (Fernando, 2016). It is analysing, summarising and presenting each financial
transaction of the company in more presentable way so that even a non commercial manager
could understand the actual financial position of the company. In this regard, the management
accounting can also be defined as a branch of accounting that performs its operations by assisting
the managers in their decision making process in context to financial performance of company.
Key functions of management accounting
1

Following are the major key functions of managerial accounting in the business
organisation:
 To provide sufficient data to the managers.
 Modifying each information recieved by them in such a way so that it could be used by
the managers for their decision making process.
 To assist managerial accountants in improving their quality of performing their
managerial functions
 Management accounting system also performs a key function of being a mean of
communication in the company regarding financial information.
Types of management accounting:
Following are different types of management accounting system that can be adopted by
an organisation in order to improve quality of management and control:
Financial accounting system
The financial accounting system can be defined as a branch of overall accounting system
that concerns with analysis of various financial transactions performed by the company and
summarising them in a professional manner for the purpose of preparing various financial reports
such as statement of financial position, income statements, cash flow statements, etc.
For this purpose the managerial accountant needs to follow several rules and procedures
provided by GAAP, Financial accounting standard board (FASB) etc. These bodies provides
several guidelines, rules and procedures that laws that is needed to be comply by each business
organisation in order to prepare their financial reports.
In addition, the AIS (Accounting information system) helps the financial accountant in
improving the quality of collecting summarising and presenting the financial data in more
presentable manner (Accounting Systems & Rules. 2017). It AIS is a computer based system that
also helps in maintaining the financial information and tracking each financial and accounting
transaction of the business in an effective way.
Furthermore, the adoption of financial accounting system is required by the company in
order to improve the internal control system of the company and providing each information to
financial accountant more accurately.
Cost accounting system
2