Management Accounting: Types, Benefits, and Techniques

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Determining types of management accounting and evaluating certain benefits in
organisational context..................................................................................................................3
P2. Defining different methods of management reporting .........................................................5
TASK 2............................................................................................................................................6
P3. Evaluating cost techniques to analyse certain methods.........................................................6
TASK 3..........................................................................................................................................11
P4 Explain the advantages and disadvantages of different types of planning tools that are uses
for controlling budgets...............................................................................................................11
TASK 4..........................................................................................................................................14
Comparison of organisation and system in financial problems.................................................14
CONCLUSION..............................................................................................................................16
REFERENCES .............................................................................................................................17

INTRODUCTION
Management accounting is the main practices of any business as it needs to make the
right business decision by analysing all financial transactions and information. For any
organization it is important to follow principles and policies that can help to operate the business
regularly (Ax and Greve, 2017). In other words, provision of financial information and data
which uses by industry to make the right decision is known is managerial accounting. According
to accountants all transactions and financial information should be properly arranged that
supports a business to grow. Another side, accounting policies mainly uses for recording the
transaction and developing firm. To understand about this, Prime furniture has been selected that
is preparing different design of furniture for attracting number of customers and making right
business decisions. This report covers accounting systems, reports, planning tools and
comparison of ways that respond the financial problems.
TASK 1
P1. Determining types of management accounting and evaluating certain benefits in
organisational context
Management accounting is important method which is useful for the manager to essential
decision in the organisation in the context of financial and non-financial transaction. This is very
essential for the top management in many ways to take insightful decision for the betterment of
the organisation (Bui and De Villiers, 2017). In the Prime Furniture, this practice helps in
identifying, measuring, analysing the financial information to pursue the goal of the organisation.
This is beneficial in taking internal decisions that improve the overall quality of information
deliver to the management.
Principles of Management accounting are as follows-
 Designing and compiling- This refers that management accounting must be designed in
proper way to represent the data so that it could the problem in the organisation related
to records, reports and statement.
 Management by Exception- It states that budgetary control system and standard costing
techniques must be follow in the system to provide precise information to the
management.
Role of Management accounting are as follows-

 Controlling- This helps in preparing and analysing the accounts and reports such as
standard cost, budget, variance analysis (Burritt and et.al., 2019). In the context of Prime
furniture, this will help in controlling different function and activities.
 Improve management process- It will help improving the overall effectiveness in the
management through proper functioning in the company. In context to Prime Furniture,
this method is beneficial in taking appropriate decision in the organisation through proper
accounting.
Difference between Management accounting and Financial accounting
Basis Management Accounting Financial Accounting
Meaning This is the process of planning,
organising, identifying, managing and
controlling the functions and activities
of the management.
This related to financial
information which runs and
monitor the business decision.
Purpose It is used for internal process It is used in external reporting.
Uses This used in managing process to take
appropriate decision-making.
This used for investor,
shareholders and regulators.
Types of management accounting system
Cost accounting system- This is used to identify the cost structure of products to
maintain the profitability and taking adequate decision-making in the process of management.
For the company Prime Furniture, this will help in estimating the cost of products and services so
that they could manage effectively.
Inventory-management system- This refers to process of ordering, storing the goods
and services to ensure them proper delivery (Ghasemi and et.al., 2019). In the chosen company,
this will help in increasing the sales and profitability to operate the business successfully and
satisfy the costumer through regular delivery.
Price optimisation system- This is useful syatem that facilitate in taking right and
appropriate decision-making in the context of deciding the price. In the context of Prime
Furniture, this helps in satisfying the costumer to provide better price of product and services to
operate the business successfully.