Definitions and References of Management Accounting System

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART (A).........................................................................................................................................3
PART (B).......................................................................................................................................12
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting system is a systematic process which generates or provide
useful information and data for management in order to assist them in decision making process.
It is system which provide a framework for effectively formulation and implementation of
strategies and action plan. This report consist of management accounting definitions and its
various aspects along with various type of management accounting systems, kind of management
accounting reporting and different type of planning tools used by business organisation inducing
their advantages and disadvantages in aspect of TPG Processing company. The report also
provide an explanation about financial problems and in which manner management accounting,
in responding to financial problems, can drive organisations to sustainable success.
PART (A)
1 Explanation of management accounting.
MAS refers to set of activities which generates relevant information for managers. Such
information ultimately assist them in effective internal management (Sisaye, Birnberg, 2012).
Following are significant definition of management accounting system, as follows:
As per IMAs, “ Management accounting defined as field or area of profession that
involves contribution towards management and strategic decision making, effective planning,
professionalism in financial reporting and performance management” (Jakobsen, 2012).
Comment- According to the above definition of IMAs it is analysed that MAS is most
significant aspect of business enterprise's management. Managerial personnel can use this
process for effective decision making. In TPG processing company, management accounting
system is adopted by company to formulate action plan and strategies.
As per CIMA “ Management accounting system can be explained as a systematic set of
activities of choosing, collecting, assessing, and communicating financial or accounting
information to managerial personnels for effective decision making” (Gibassier, 2017).
Comment- According to the definition of CIMA, it is analysed that management
accounting system provides a systematic presentation of raw financial information to top
management for taking business.

Origin of management accounting- The origin of management accounting can be track in time
period of early industrial revolution. In addition, this accounting was evolved with help of cost
accounting techniques (Schaltegger and Zvezdov, 2015).
Principles of management accounting-
 Relevance- As per this principle of management accounting, the information included in
management accounting systems and reports should be reliable to business transactions.
 Influence- According to this principle, information of management accounting reports
should be communicated with all members of business.
 Value- The management accounting is linked with various kind of operations of
companies. Hence, information included in this system should be valuable.
 Credibility- As per this principle, the management accountant is expected to be ethical,
reliable and well aware of accounting concepts.
Roles of management accounting system:
 Provide detailed information- This is one of the important role of management
accounting that is related with providing detailed information including financials and
non financial information. Such as in the TPG processing company, their managers get
complete information related to financial and non financial transactions.
 Helpful in decision-making- Another role of management accounting is that it is linked
with the effective decision-making by providing various kind of reports. Like in above
company, they take better decisions by use of internal reports (Soltes, 2014).
 Enables better planning- The management accounting is useful for better planning and
strategy formulation. Same as in above company, their managers plans the strategies
effectively by help of MA reports.
 Helps in resolving financial issues- With help of management accounting systems,
companies get able to solve any kind of financial issue that occurs. Such as in above
company, their financial issues such as higher expenditure can be resolve by cost
accounting system.
 Improves organisational performance- In addition, the management accounting plays an
important role in context of managing financial and non financial performance. Like in