Types of Management Accounting System and Methods

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION......................................................................................................................3
SCENARIO 1.............................................................................................................................3
Types of management accounting system..............................................................................3
Different methods of management accounting.......................................................................6
Advantages and disadvantages of different type of planning tools for budgetary control\....8
Comparing how organization adapts the management accounting system in order to
respond to financial problems................................................................................................9
SCENARIO 2...........................................................................................................................10
Producing financial report....................................................................................................10
CONCLUSION........................................................................................................................14
REFERENCES.........................................................................................................................16

INTRODUCTION
Management accounting is all about reporting the financial transactions associated
with the organisation (Schaltegger, 2018). This is about to report the financial position
associated with the organisation. This report is based on the case study of Capital Journey Ltd
in respect to the management of the financial transactions of organisation. This project would
assess various elements related to the accounting of organisation. Henceforth, report will
emphasis over various types of management accounting system associated with the
organisation. Various methods associated with the management accounting system can be
projected in this report. Income statement with the support of different methods of
management accounting will be projected briefly in this project. Advantages and
disadvantages associated with the different planning tools part of the organisation.
Furthermore, project will demonstrate the fact how management accounting would respond to
various financial problems associated with the organisation. All different areas associated
with the management accounting would demonstrate in this project.
SCENARIO 1
Types of management accounting system
Management accounting is comprises with various systems that involve different
methodologies and techniques to support the best form of representation of the company’s
books of accounts. Management accounting is a methodology that delivers the better
presentation of the financial reporting of the organisation. The reporting done in the
management accounting project about all key information in respect to the user of the
financial statements (NGUYEN and LE, 2020). Different methodologies and tools and
techniques that support in the management accounting provide the clinical information to
user of the financial statement. They get to know about all different information about the
financial position of organisation. All these various technique support the organisation to
represent all different critical areas to represent the financial position of organisation in the
best way possible. All different techniques and methods part of the management accounting
can be projected in the following points.
Inventory management system
This is also a major type of management accounting system used by Capital Joinery. Under
this management accounting system all the requirement and application of the inventory used

within the company. The major reason underlying this fact is that the inventory is the most
essential aspect of the business and for this its proper availability is very important. Thus, for
this Capital Joinery uses the inventory management system in order to have all the records of
the inventory coming to business and going out in form of finished goods. Further if the
inventory will not be managed in effective manner then this will have a great impact over the
overall working of the company. This system is used on the basis of the nature of
organisation, resources of the business entity, information quality and many such factors.
Inventory management system requires strong system of recording the inventory.
Management also must favour the infrastructure development so that proper recording and
monitoring can be conducted in the inventory records maintenance.
Cost volume profit analysis
Cost volume profit analysis formerly known as the breakeven point. This is the
position in the financial records of company that denote no profit no loss situation in context
to the organisation. It is essential for the organisation to achieve tis position in the
organisation as early as possible to denote the financial capability of the organisation. At the
Cost volume profit point in operations company get to recover all the expenditure the
organisation has entertained against the business operations by the organisation (Taylor and
Scapens, 2016). It is a critical technique that denote the exact position in organisation which
demonstrate about the point where the organisation has been capable enough to deliver the
outcomes in the business operations and functions to reach the point where company get to
recover all expenditure it required to incurred in the organisation to reach the point where the
company would contain no profit and no loss situation in operations. Break even point
company calculate in both the form total number of unit company needed to sail or in form of
total amount of turnover company need to address in the operations to achieve the maximum
level of outcomes against the business operations entertained by the company (Cuzdriorean,
2017). Cost volume analysis is a key point in the company as it denotes the reach ability of
the operations of organisation. Every time company deliver a product in target market at first
company try to reach the Cost volume profit point so that overall cost incurred to produce and
deliver the final service can be recovered by the organisation. Beyond this point company get
to make profitability against the business operations entertained by the organisation. It is the
priority of the business functions of organisation to reach at this point in against to deliver the
business functions at the organisation level. In order to calculate and identify about the