Management Accounting: Principles, Techniques, and Applications in Diageo

Management accounting

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1............................................................................................................................................3
Principles of management accounting.........................................................................................3
Management accounting and management accounting system roles..........................................4
Utilization of techniques and methods for the management accounting.....................................5
Integration of management accounting in the organization.........................................................6
Benefits of management accounting functions............................................................................7
CONCLUSION................................................................................................................................7
PART 2............................................................................................................................................9
INTRODUCTION...........................................................................................................................9
Utilization of planning tools in management accounting and differences between them...........9
Comparison of ways for management accounting for its application and effectiveness for
dealing with financial problems.................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is the presentation of the financial information which shows the
internal purpose of the management that allows the business in making the key decision. The
managerial accounting is the one which encompasses the many facets of the accounting allowing
the company in making decision (Abdusalomova, 2020). Diageo is the UK company which is a
manufacturing company that manufactures many alcoholic beverages. It is a multinational
company and is the largest producer of Scotch whiskey in the world. This project demonstrates
the understanding of the management accounting system in the organization. With the help of
this project different application of the management accounting techniques is going to be used.
MAIN BODY
PART 1
Principles of management accounting
The principles of the management accounting are as follows,
Designing and compiling:
Management accounting helps the Diageo to design the accounting information, records,
statements and also other evidence which allows the business in the future to meet the
requirements which are particular to the relevancy of the business.
Management by exception:
Management accounting follows the budgetary control system and also the standard
costing techniques. This allows the management accounting in making comparison of the actual
performance of the company to the findings in management accounting.

Control at source accounting :
The best way of controlling the cost is by controlling at the point at which it is incurred.
Management accounting enables the business to understand the utilization and usage of the
services to be understood and employed (Charifzadeh and Taschner, 2017).
Accounting for inflation:
For an enterprise earning profit is essential and due to the change in the value of money
the profit which the business is not the same as it contributes towards the business with the help
of real value and money. The rate of inflation is calculated and understood by the management
accounting.
Use of Return on Investment:
The rate of return shows the efficiency of the business. Management accounting helps the
business to analyse how much return it has made out of its investments with the calculation of
return on investment.
Management accounting and management accounting system roles
The roles of management accounting systems is to advise the managers to for the
financial implications of the business which helps in the business decision-making for aiding the
business to growth and development of profit. Management accounting helps in the preparation
of the reports, budget, commentaries and also financial statements. Management accounting
system is the system which provides critical informations to the management about the
utilization of the operations of the business for its decision-making. A manufacturing company
like the Diageo utilizes these systems for management of its costs and process. The management
accounting systems vary from industry to industry about what they are utilized for. Some roles of
management accounting systems is to collect the data which is required in the field of accounting
which informs the management of the business operations (Englund and Gerdin, 2018)
Management accounting systems utilizes the budget for the planning of the business operations.
These systems utilize the performance reports for noting the deviation of the actual results in
comparison to the budget analysation.
Utilization of techniques and methods for the management accounting
Some important tool and techniques which are used in the management accounting are,
Financial planning :