Management Accounting: Types of Systems, Reports, and Techniques

MANAGEMENT
ACCOUNTING

Contents
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................3
Part 1.......................................................................................................................................................3
Part 2.......................................................................................................................................................8
Part 3.....................................................................................................................................................12
CONCLUSION........................................................................................................................................17
REFERENCES........................................................................................................................................18

INTRODUCTION
Accounting deals predominantly with activities that are related to financing, although
there are other distinct accounting methods such as management accounting (MA) that prioritize
all kinds of transactions. MA is an accounting that is essential for the monitoring and
documentation of financial and non-financial records (Cescon, Costantini and Grassetti, 2019).
This detail is used if the managers need to generate internal reports at any time period. MA is
primarily structured for administrators to take disciplinary action relating to the use of financial
and non - financial resources. A company called Innocent drinks Limited is selected in this
report. This company is a client of AJ and sons that offers accounting-related consulting services.
Below, the study is classified into three sections and the first one covers details related to MA
systems and reports. While part two includes several financial methods and their functional
effects on a given collection of data set. The role of planning methods and MA systems was
addressed in the final part of the study in order to resolve the financial issues of the firms.
MAIN BODY
Part 1
Types of MA systems and essential need.
MA- This is the practice of writing reports on corporate activities to help administrators to make
decisions for the short and long term. It enables an organization to achieve its objectives by
defining, evaluating, assessing, understanding and forwarding key information to management.
Purpose of MA- The primary aim of this accounting is to perform a vital role in decision-making
process for the internal members (Wang, Wang and Wang, 2019). This accounting contributes to
administrators by supplying them with required time knowledge that is used as a decision-
making tool. In addition, this accounting also provides a mechanism for regulating companies
that contributes to efficiency improvements. In respect of the above Innocent Drinks Limited,
they should follow this accounting for their activities with the goal of enhancing efficiency from
all viewpoints like financial and non-financial aspects.

Distinction between MA and financial accounting:
Base for
comparison
MA Financial accounting
Users This accounting is planned
specifically for the internal clients.
This is useful for internal as well as
external users of an organization.
Regulations There are no rules and principles for
the preparing of internal reporting in
it.
This accounting includes serval laws
that must be taken into account by the
bookkeepers.
Form of
business
This can be used in any
organization. It does not include any
of the entities that need to be listed
in stock exchange.
Although this accounting is a necessary
prerequisite for all firms listed on a
respected stock exchange.
Types of MA systems: This accounting has relations with every industry section. Out of which
there are a number of accounting systems that are discussed in this way below:
Cost accounting system- This accounting method is formed by a mechanism of monitoring and
managing all of those costs that exist over an accounting period in a company. Under it the cost
of each service is reported and contrasted to uniform output (Tan, 2019). Because of this,
supervisors enable to measure the productivity and success of various projects in terms of costs.
This accounting system collects knowledge on costs related to raw products, labor etc. in
production firms. In relation to Innocent Drinks limited, financial manager can receive critical
details from this accounting method about the cost of various activities along with variation. This
may lead to a reasonable step in terms of fund requirement or reduction of certain tasks that are
cost-consuming higher in above company.
Essential requirement- The necessity for this accounting system to manage unnecessary costs, in
order to raise sales. This becomes feasible when cost utilization is continuously monitored during
each activity. This accounting system is key in Innocent Drinks limited to allow for the reduction
of costs of wasteful operations. As well as contributing to the development of appropriate plans
for relevant practices that result in more spending.