Understanding Management Accounting System and Methods of Accounting Report

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Understanding management accounting system and their essential requirement ................3
P2. Explaining different methods of accounting report...............................................................5
TASK 2............................................................................................................................................6
P3. Calculating cost that used in techniques to prepare income statement..................................6
TASK 3..........................................................................................................................................11
P4. Explaining the use of planning tools used in budgetary controlling...................................11
TASK 4..........................................................................................................................................13
P5. Comparing different organisation that adapting accounting system to financial response. 13
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting refers to the methods that measure internal process and system
and evaluate the overall management of the organisation. This is important to understand the
financial accounting as the intend purpose of managerial accounting is to make the purposeful
business decision that will help in achieving the goal and objectives (Arwani, 2019).
In this report, the company is Prime Furniture, which is UK based organisation that is
planning to start training course for interns. In this report, the meaning and types of management
accounting system is analysed and their essential requirement is being studied. Management
techniques used in organisation is being used and different methods has being determined in this
report. Apart from that different planning tools and its advantages and disadvantages in the
context of budgetary control is being analysed and comparison of organisation that used in
management accounting with the response of financial problem.
TASK 1
P1. Understanding management accounting system and their essential requirement
Management accounting- It refers to the process of identifying the managerial
accounting and financial accounts that main objective is to provide best information for the user
that will help the manager to take essential decision. In the context of Prime Furniture, this tool
is very important from the point of view of understanding the overall financial position.
Management principles- These are important for every organisation to follow and adhere
with them in order to enhance efficiency (Chukwuemeka, 2019). In the Prime Furniture,
following principles are as follows-
 Relevance- Information is key part in the management accounting that need to be check
and monitor thoroughly as information must be relevant to the fact. This principle can be
used in the selected company as the most useful and relevant information for taking
effective decision-making is determined.
 Credibility- This concern with taking appropriate method to take responsible decision
and shareholder are more likely to invest in the firm. For the chosen company, this helps
in building better image of organisation in the view of shareholder and investor.
Difference between financial accounting and management accounting
Basis Management accounting Financial accounting

Meaning This deals with many activities
and function such as planning,
identification and controlling
of all financial information in
the organisation.
This assess all necessary
financial information that will
help the company in decision-
making.
Purpose This helps in the monitoring
internal process.
This is useful in external
environment of company.
Uses This is useful in taking
important decision-making
that will help in overall
management success.
This is useful for shareholder,
investor and competitors.
Management system- This works for the improvement in the internal process of management
and develop the effectiveness in the performance. Some system are as follows-
 Cost-accounting system- This states the controlling all kinds of cost and expenses
related to the different activities and functions. It aims to tracking all raw material that
uses in production stages and they turns into finished goods (Comerio and Tettamanzi,
2019). For the Prime Furniture, this system is essential requirement as they will help in
controlling the cost by optimizing the cost information. It will also useful in guiding the
price fixation and make easy for the management.
 Inventory-management- This includes the aspects such as monitoring and controlling
the purchases from the suppliers as well as customers. This depends on the types of
products that sell an through which channel. This regulate end-to end production and
business management that also helps in demand forecasting to metrics, reports and other
accounting system. The essential requirement of this system in the selected organisation
are that it helps in forecasting the production process and improve the inventory to fulfil
the demand of the organisation. It is supports the scanning of all inventory process and
track raw material, finished goods for manufactures. This also support the improved,
actionable in the analysis of inventory management.