Management Accounting: Principles, Role, Techniques and Applications

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Part - 1..............................................................................................................................................3
An explanation of the principles of management accounting......................................................3
Role of management accounting and management accounting systems.....................................4
The use of techniques and methods used in management accounting by presenting calculations
for an income statement using variable costings to show how these financial reporting and
statements support business growth and success.........................................................................5
Evaluation of how management accounting is integrated within the organization.....................7
Benefits of the functions to the organization...............................................................................8
Critically reflecting the application of management accounting.................................................9
Part 2................................................................................................................................................9
Planning tools...............................................................................................................................9
Ways in which management accounting is applied, the effectiveness of Management
Accounting in dealing with financial problems and preventing financial problems in
organization................................................................................................................................12
Recommendation.......................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting can be defined as the financial data and advice given to an
organization in order to develop its business. The report consist of two parts: Part A will explain
the importance of principles of management accounting. Role of management accounting and
management accounting systems have also been discussed. The report will specify the use of
techniques and methods used in the management accounting by properly presenting the income
statement that are necessary for the growth of the business. Further the report will evaluate of
how management accounting is integrated within the organization of ovations system. Moreover,
critical evaluation of the application of management accounting will also be highlighted.
Part b will compare and contrast three planning tools that are used in the management
accounting and the examples to know the advantages and disadvantages. Further, with the help
of examples, the report will highlight and compare the ways in which management accounting is
applied and the effectiveness of management accounting in dealing with the financial problems.
Moreover, proper conclusions and recommendations for the organization of ovations system to
which methods have been applied to achieve sustainability have will also be highlighted. It is
important that the system of management accounting is properly studies and this will be further
discussed in the report.
Part - 1
An explanation of the principles of management accounting
Management accounting can be defined as the process that is required by the managers in
order to guide the managers about the correctness to take right decisions. Accounting helps the
users to understand the purpose of sharing. Under this, the management accounting is help
important for the managers as they can take important decisions regarding their organization
(Nawawi and et.al., 2020).
There is a small company names ovation systems in the united kingdoms that is engaged
in the business that serves the purpose of designing and manufacturing services related to video
surveillance used for commercial use particularly for the government and military forces. These
services consist of the video and audio records and video stabilization. The following discussion
will be on the management accounting of the Ovation systems.

Trust – It is the obligation of the managers to take corrective actions that is benefited for the
company. Trust is important part of any organization which makes the information needed in this
process to be accurate. A good management accounting practise can establish trust in the
organization.
Up-to date – It is important that the information used for management accounting is latest and
up to date. With the help of this the managers can know the present situation and not the
situation which has been outdated.
Presentation – It is one of the basic principles that includes the need for the managers to prepare
reports of sales and cost to achieve the organizational goals (Zadorozhnyy, 2022).
Understandable – It is the principle that used information which is clearly defined and easy to
understand for the managers. It helps the managers to perform the process easily and this will
lead to success of the organization.
Timelines – This principle of management accounting says that the data can be used for
continuous basis and for comparing with two or more items.
Role of management accounting and management accounting systems
There are many uses of accounts in any organization. It is in the interest of the accounting
information users to know about the actual outputs of the organization in a given time period.
This can be fulfilled with the help of accurate accounting information. Therefore, it can be said
that the main motive of accounting is to share information. This information is shared by
preparing the financial statements at the end of a financial year (MUHAMMAD and et.al., 2020).
This process can be derived from the internal and external users of the accounting. The managers
are considered the internal users of the information, and they are served with proper information.
Hence, there is no doubt in saying that management accounting plays a major part of accounting.
The system of management accounting is defined as the theoretical practices of procedures and
different rules in order to make report under the management accounting. It is essential for
ovation systems for understanding the need for management accounting and system of
management accounting.
Role of management accounting
Costing – Management accounting consist of all the techniques that are used to report the costs
and allocating them. Costing is one of the major part of accounting process as success of the
organization depends upon the costing of variety of products (Ruiz, and Collazzo, 2020).