Management Accounting and Different Types of Management Accounting System

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1 Management accounting and different types of management accounting system. ...............1
P2 Methods used in MA reporting...............................................................................................3
M1 Benefits of MA and its application........................................................................................4
D1 Relationship of MA systems and reporting within organisation process. .............................4
P3 Cost calculations using appropriate techniques in cost analysis for preparing income
statements. ...................................................................................................................................4
M2 Management accounting techniques.....................................................................................5
D2 Financial reports accurately applying & interpreting data for the complex businesses.........5
P4 Different types of planning tools used for budgetary control................................................6
M3 Application in budgetary control...........................................................................................8
P5 Comparison of different adaptation methods adopted by organization for responding to
financial systems..........................................................................................................................8
M4 Sustainable success..............................................................................................................10
D3 Planning tools used to solve the financial problems............................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting helps in preparation of different financial reports that help in
analysing the operation and performance of the business. This report will identify the use of
costing methods for ascertaining the financial performance and the different types of
management accounting systems that can be used. The report will also evaluate different
budgetary options and conclude how the management accounting tools can be used in an
organization.
MAIN BODY
P1 Management accounting and different types of management accounting system.
Management accounting is also known as managerial accounting. It is defined as process
of analysing the business costs & operations for preparing internal financial records, reports and
the account for helping the managers of company in decision making for achieving the goals and
objectives of business.
Functions of management accounting
 MA provides financial information to internal management for decision making.
 MA analyses cause and effects of facts and figures presented in the accounting reports
(Lasyoud, Haslam and Roslender, 2018).
 It uses special techniques & concepts for mitigating the variances and interpretation of
data.
 It makes efforts for improving the efficiency of employees working in the organisation.
 It analyses both quantitative and qualitative reasons of the variances.
Financial accounting system
It could be defined as specialised accounting branch for keeping track of the financial
transactions of company. With the use of standard guidelines, transaction are recorded, than
summarized & presented in the financial reports or the financial statements like income
statement or balance sheet (McLaren, Appleyard and Mitchell, 2016).
Rules and procedures
Financial accounting runs on the rules and procedures laid down by the government
authorities for recording and representing the financial transactions. They have to follow the set
accounting standards for presenting the financial statements.
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Accounting information systems
Accounting information systems are the structures that business uses for collecting,
storing, managing, processing, retrieving and reporting the financial data so that it could be used
by consultants, accountants, business analysts, CFO regulators and auditors.
Internal control
There should be strong internal control within the organisation so that all the information
provided by accounts is accurate and reliable. The control should be laid at every level from
where the information is being received. It is the duty of executives to ensure that all the
information are being provided are correct.
Auditing
In financial accounting all the financial information is audited by the auditors (Burritt,
2017). They ensure that all the information is being recorded using the appropriate accounting
standards. They also ensure that the information provided in the financial statements is free from
material misstatements.
Cost Accounting systems
It refers to business practice where the organisations are concerned with recording,
summarizing and studying the cost spent by company over any service, process, products or
anything in organisation. Such kind of financial statements give management visibility of their
cost informations.
Product costing
Product costing refers to costs incurred for manufacturing the product item. These cost
includes direct materials, direct labour, consumable production supply and factory overheads.
Product costs are presented in financial statements as it includes manufacturing overheads as
required by IFRS.
Activity Based Costing
ABC refers to costing method identifying the activities in organisation and assigning cost
of every activity to the products & services as per actual consumption by every activity. The
model assigns indirect costs to direct costs in comparison with conventional costings.
Management accounting system
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