Analysis of Management Accounting Journals

The assignment requires the analysis of various journals related to management accounting. The provided list includes journals such as 'Human Resource Management Issues in Accounting and Auditing Firms', 'Exploring how the Balanced Scorecard Engages and Unfolds', and others. The student is expected to provide a detailed analysis of these journals, including their titles, authors, and any relevant information.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Management accounting and its different types of systems..................................................1
P2. Different methods used for management accounting reporting............................................3
M1. Evaluation of various benefits of management accounting systems....................................4
D1. Management accounting system and management accounting reporting are integrated with
organisational processes...............................................................................................................5
TASK 2............................................................................................................................................6
P3. Appropriate techniques of cost analysis to prepare an income statement.............................6
M2. Management accounting techniques and financial reporting documents.............................9
D2. Financial reports which accurately apply and interpret data for a range of business
activities.....................................................................................................................................10
TASK 3..........................................................................................................................................10
P4. Advantages and disadvantages of different planning tools used in budgetary control........10
M3. Usage of different planning tools and their applications for preparing and forecasting
budgets.......................................................................................................................................12
TASK 4..........................................................................................................................................12
P5. Organisations adapt different management accounting systems to respond to different
financial problems......................................................................................................................12
M4. Management accounting in response to financial problems which leads organisation to
sustainable success. ...................................................................................................................15
D3. Various planning tools to resolve financial problems.........................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Management accounting is a process of preparing the confidential reports that is
beneficial for the top managers to track the activities leading towards the fulfilment of
organisational goals (Management accounting, 2018). These are the reports which provides all
the relevant information for the purpose of formulating short term and long term strategies by
taking appropriate decisions. Such technique helps in formulating policies for day to day
activities as well as for the future activities. Such accounting is a framework which includes all
the other fields of accounting which aims to inform the management regarding to the various
functions of business. It manages all the obstacles which arises at the path of completing various
tasks (Ward and Calabrese, 2018). To study the practices of managerial accounting, Smithfield
Consultants Limited is selected. The selected organisation was incorporated in 2003 located at
London, Unite Kingdom which provides financial along with consultancy services to private as
well as public business entities.
In the following report broad information regarding to management accounting, different
types of management accounting, various methods used for accounting reporting with benefits,
appropriate techniques used for cost analysis for preparation of income statements are clearly
mentioned. It also involves different planning tools with benefits and drawbacks as well as role
of management accounting in overcoming from the financial issues.
TASK 1
P1. Management accounting and its different types of systems.
Accounting is a kind of system which is related to the recording of financial transactions
in a systematic manner. The main objectives of accounting is to identify and recording all the
financial transactions in proper books of accounts to get detailed information about the financial
positions. Such system helps in having control over the assets along with liabilities to disclose
the profits together with losses with the reason of advising tax related matters during an
accounting period.
The management accounting is evolved for the basis of providing all the necessary
information regarding to the accounting to the managers for taking effective decisions along with
executing the strategies and plans for controlling, communicating, coordinating various activities
and motivating all its employees. Such accounting helps in assisting the executives in planning
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different activities and formulating various future plans to control the performances. Such system
provides various alternative solutions to overcome the business problems. It lays down various
ways to evaluate the effectiveness and efficiency to achieve the targets. It emphasizes on
forecasting future events by analysing past situations in order to be prepared for the future. The
Smithfield Consultants Limited applies various management accounting systems which are as
follows:
 Inventory management system: This is a framework which acts as a supervision along
with monitoring the available and required inventory in any organisation. Such system
helps in keeping the sufficient required inventory to perform the operations smoothly
without any delays. The tracking helps in reducing the loss of obsolescence and wastage
of the available inventory with the business entity. Inventory management system is
essentially required in Smithfield Consultants Limited to track its inventory related to the
stationary items as well as the available inventory stock of capital for performing the
business operations with its clients (Vom Brocke, 2014).
 Cost accounting system: It is a system used by different organisations to estimate the
associated cost of the different products available with them for determining profitability
analysis, controlling costs along with valuation of the inventory. Such system helps in
guiding top level managers to ascertain as well as analysis of various costs associated
for the purpose of reducing various costs to achieve maximum profits. The Smithfield
Consultants Limited requires such system for examining the cost structure and
establishing cost effect relationships by dividing the costs of various products.
 Price optimization system: It is a technique which uses mathematical analysis to
evaluate the customers and clients perception towards different prices and services via
different channels. Such system describes various applications which directly or
indirectly helps in setting prices. It provides a structure for effectively determining the
prices in such a way which facilitates the achievement of profits of the business entity.
Such system plays essential role in Smithfield Consultants Limited understand the
buying pattern along with analysing the perception towards the services provided by the
enterprise to its clients (Tucker and Lowe, 2014).
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P2. Different methods used for management accounting reporting.
Management accounting reports are helpful in examining resources usage, presenting
clear image related to financial health together with position in the dynamic and competitive
market. These reports helps in phrasing new plans, strategies as well as making effective
decisions which benefits the business processes in short term and long term. Such reports are
helpful in providing the required information to various investors as well as tracking the cash
flows to monitor the changes (Smith, 2017). Such reports helps the small business owners to
analyse the business performance along with departmental performances for coordinating various
activities in order to control various costs for taking critical decisions for the enhancement of the
company. The managers of Smithfield Consultants Limited uses various reports to strengthen the
position in the market. Some of the reports are as follows:
 Budget reports: These reports are prepared by utilising the previous financial plans for
making projections for future. It includes the list of all expenditures and incomes during
an accounting period. An organization develops strategies to complete its tasks within the
budgeted amounts. These provides a structure to plan the organisational future earnings
and preparation of financial statements. Smithfield Consultants Limited composes such
reports to predict the cash flows and allocating the resources in various activities as well
as preparing the basis for judging the performance.
 Financial reports: These reports acts as statements which reveals detailed information
related to the financial progress, performance and position of the business. These are
prepared in systematic and meaningful manner which helps in analysis that are essential
to wide users for taking required decisions. The financial reports of Smithfield
Consultants Limited are useful to govern the organisational cash flows as well as useful
for various investors and lenders to measure the financial health of the entity (Schaltegger
and Burritt, 2017).
 Performance reports: These provides a brief summary of the performance of business
entity as well as its employees. These includes the detailed statements which helps in
measuring the results of various tasks related to their success over some specific time
period. The managers of any business analyses these reports very attentively to observe
the deviations and providing some ways to overcome them for the reason of maximising
profitability. Smithfield Consultants Limited prepares the described report to construct
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strategic decisions as such report provides a clear image in relevance to health along with
performance of the concerned firm.
 Cost managerial accounting report: These reports are helpful in providing figures in
numerical terms of the total cost associated with the production of products as wee as
services. There are various direct or indirect costs associated with the manufacturing of
product such as material costs, overhead costs, labour costs as well as various other costs.
The managers of Smithfield Consultants Limited prepares such reports to establish
various policies, strategies required in future as these reports presents the organisational
performance and profitability (Ross, 2017).
M1. Evaluation of various benefits of management accounting systems.
Management accounting system Benefits
Inventory management system  Such system helps in improving the
warehouse management by maintaining
transparency as well as efficiency in the
selected organisation.
 It benefits Smithfield Consultants
Limited in maintaining the required
stock as well as placing the order before
the requirements to eliminate the
hurdles of performing operations.
Cost accounting system  When different economic conditions
occurs, the selected organisation takes
corrective measure with the help of cost
accounting to formulate various
strategies according to the needs and
demands of the clients (Rieckhof,
Bergmann, and Guenther, 2015).
 Such system helps the selected firm to
measure the efficiency and maintaining
it by making provisions to improve
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them at the time required.
Price optimization system  Such system helps in evaluating the
customers and clients perception
towards different prices and services
via different channels.
 It benefits the managers of Smithfield
Consultants Limited to set the prices of
its commodities after analysing the
attitudes of its clients along with
customers (Renz, 2016).
D1. Management accounting system and management accounting reporting are integrated with
organisational processes.
Management accounting system and management accounting reporting are closely
related with the processes of an organisation. The management accounting reports provides
information related to operational as well as financial performances. The management
accounting systems helps in planning and controlling the operations for the purpose of taking
effective decisions. Both plays important roles for each other. The managers of Smithfield
Consultants Limited applies such relationship of management accounting system and
management accounting reports in their procedures of the operation. The management
accounting systems are used for the preparation of various financial reports which defines the
health as well as position of the selected entity. Managers carefully examines various available
reports t
TASK 2
P3. Appropriate techniques of cost analysis to prepare an income statement.
Absorption cost: It is that cost which includes all the relevant fixed as well as overhead
expenses related to production of a product (Nilsson and Stockenstrand, 2015). This method
helps in preparation of tax reports, financial reports and leads to provide accurate results in
calculation.
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Marginal cost: It is that cost which is incurred on producing an extra unit of a product. It
leads to change on total cost and profit for making an additional unit of product and helps in
decision making process (Moore, 2014).
Working Notes*-
Calculation of sales (25*10000) - 250000
Calculation of good sold- 140000
(Direct material+ Direct labour+ Variable manufacturing overhead+ Fixed manufacturing
overhead : 50000+30000+20000+40000)
Calculation of selling and manufacturing expenses- 60000
(Fixed + variable selling and manufacturing expenses: 30000+30000)
Income statement by marginal costing method
Particulars Amount
Sales
Less: Marginal cost of sales
Contribution
250000
130000
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Less: Fixed cost
Net income
120000
70000
50000
Working Notes*-
Calculation of marginal cost of sales - 130000
(Direct material+ Direct labour+ Variable manufacturing overhead+ Variable selling and
administration expenses: 50000+30000+20000+30000)
Calculation of fixed cost - 70000
(Fixed manufacturing overhead+ Fixed selling and administration expenses: 40000+30000)
Interpretation- From above numerical, it can be analysed that company is getting the
net profit of £ 50000 from the marginal costing method. It is calculated with the help of marginal
cost of sales which is of £130000 and fixed cost that is of £70000.
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Interpretation- As per the above numerical it has been interpreted that company is getting the
loss of £75000 through the marginal costing method. As well as marginal cost of sales is of
£130000.
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M2. Management accounting techniques and financial reporting documents.
Management accounting techniques plays essential role in generating financial reports as
well as statements. Organisations prepares financial statement such as profit and loss account,
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balance sheet with the usage of accounting tools as well as techniques. Financial reports are
prepared with the appropriate data and information which is available from the accounting tools
along with techniques. The managers of Smithfield Consultants Limited applies various
accounting techniques in the reference of various financial reports. This helps in preparing the
required financial reports at the time necessary. Thus, management accounting techniques plays
important character in preparing financial reporting documents (Meyer, 2014).
D2. Financial reports which accurately apply and interpret data for a range of business activities.
Financial reports describes all the business activities in simplified manner which are easy
to understand by the managers. Such reports helps in preparation of various financial statements
and helps in checking about the financial position of the firm. Such reports are the statements of
the organisation which reveals the health, position and profitability conditions also helps the
managers to formulate various strategies for future by analysing the current as well as past
reports. The purpose of preparation of such reports are to accurately apply them to provide
information to the external parties as well as interpreting various financial activities within the
firm. The top management of Smithfield Consultants Limited evaluates such reports to check,
monitor and control the effectiveness of various business activities (Maas, Schaltegger, and
Crutzen, 2016).
TASK 3
P4. Advantages and disadvantages of different planning tools used in budgetary control.
Budgetary control: These are used for the purpose of evaluating, coordinating and
controlling in order to analyse the past financial statements to prepare the future plans of the
entity. The main objective of budgetary control is to formulate the plans and communicating
same with the various departments for coordinating the activities for establishing a proper system
of control as well as motivating the employees for improving the performances. Such controls
provides a structure of limiting various expenses over incomes. Such controls serves the function
as blueprint for the financial plans communicated by the top managers in facilitating directions
for controlling expenses with the motive of increasing profitability. The managers of Smithfield
Consultants Limited frames various financial with non financial targets for collection of
required information on time to manage various activities in the organizational procedures. Some
to the budgetary control used by the selected organization are as follows:
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Master budgets: These are the central planning tools which are used by the management
teams to judging the performances of the employees and control the activities of an organisation.
Such budget represents the planned operating budgets and financial budget which includes all the
financial transactions occurred in any accounting period (Kokubu, and Kitada, 2015). Such
budget provides the summary of other budgets prepared by the business entity.
Advantages:
 It provides a framework to re-evaluate the current activities and formulate new activities.
 It helps the managers to communicate its objectives as well as coordinating various
activities across the Smithfield Consultants Limited.
Disadvantages:
 It is very complicated task for the managers of the selected firm to make changes in the
numerical values in such budget.
 Such budget lacks detailed financial information which also affects various other budgets
within Smithfield Consultants Limited.
Cash budget: It serves the purpose of recording detailed information related to the cash
receipts as well as the cash payments during a financial year. A detailed analysis of the inflow
along with outflow of cash within the organization is provided by such budget. Such budgets are
prepared at the end of accounting year which are based on the current years transactions (Kieso,
Weygandt, and Warfield, 2016).
Advantages:
 It allows any firm to establish its credit limit by maintaining its liquidity position.
 Such budget helps in reducing the scarcity of cash during the time period when there are
more expenses.
Disadvantages:
 It limits the abilities of the firms to build their credit profile.
 There are various obstacles associated with clearly defining the cash positions in
Smithfield Consultants Limited.
Zero based budget: These are the approaches to plan, design and prepare the budgets
from zero. The main purpose of such budget is to eliminate various unnecessary costs at various
stages. Such budget assumes that no balances are to be forwarded and there are no expenses to be
paid in another financial period (Farrell and Gallagher, 2015). Whenever the budgets under zero
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based budgeting are prepared, the transactions are re-evaluated and proceeds from zero as base.
Advantages:
 It helps the firms to allocate its resources in different department as well as activities in
effective and efficient manner.
 Such budget enhances better coordination along with communication within various
departments to eliminate unproductive transactions.
Disadvantages:
 The base of such budgeting is zero which indicates that there may be insufficient
resources with the Smithfield Consultants Limited.
 It is very complex as well as time consuming budgeting technique which requires expert
managers to perform various tasks.
M3. Usage of different planning tools and their applications for preparing and forecasting
budgets.
Budgetary control is an approach which is used by the managers for the purpose of
evaluation, coordination as well as controlling the past financial statements to prepare the future
plans of the business organisation. Various planning tools are formulated for the reason to
forecast various budgets such as master budget, zero based budget and cash budget by
Smithfield Consultants Limited. Master budget acts as framework for re-evaluating the current
activities and formulating various new activities to communicate the objectives as well as
coordinating various activities. Cash budget provides the detailed information related to the
inflow and outflow of cash within the organization. Zero based budgeting is used to eliminate
various unnecessary costs at various stages to promote better coordination as well as
communication to eliminate unproductive transactions within various departments of the selected
firm. All the planning tools helps in minimising the risks for preparing and forecasting the
budgets (Collis and Hussey, 2017).
TASK 4
P5. Organisations adapt different management accounting systems to respond to different
financial problems.
Financial problems: These are the pressures which directly or indirectly creates
uncooperative situations within the enterprise as well as limits its efficiency and profitability.
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These problems becomes the sources of stress which gets out of control when not properly
considered or managed. Such problems create negative impact on the organisational growth. All
the organisational managers implement various strategies to overcome those problems and
succeed in solving them. Different kind of financial issues are as follows:
 Problem of debt financing: Debt financing is a situation where an organisation raises
money for capital expenditures by selling the organisational bonds, notes to various
investors. The selected firm is suffering from such problem as appropriate investors are
not identified which restricts them to get money for expenditures.
 Balance sheet issues: All the organisations at some point of time faces the problem of
mismatch between assets and liabilities (Busco and Quattrone, 2015). The liabilities are
more as compared to the assets, this arises due to low profits and incomes. The selected
firm is no different. They are also facing such problems as the liabilities are more than
the their assets.
 Problem of risk management: Various risk factors are identified, measured and
evaluated to manage them effectively. The selected firm is facing the problem of risk
management due to failure in using appropriate risk analysis tool, mismeasurement of
risk, miscommunication between managers while exchanging risk control metrics as well
as failure in monitoring and controlling the risk factors.
 Problem of equity financing: Equity financing means when the involvement of
investors share increases with increase in the ownership in exchange for capital. The
control of the business is more in the hands of investors and all the confidential reports
are also to be discussed with them.
Financial governance: These are the set of rules, regulations and practices which
controls the operations of any company. Financial governance improves the effectiveness with
regards to accountability of the firms to perform their operations smoothly in order to look for
the future growth (Brierley, 2017).
Management accounting approaches: These helps in setting frameworks to resolve the
financial issues by making effective decision. The managerial accounting approaches helps in
arranging appropriate information to managers for the allocation and use of available resources
in efficient manner (Gwilliam, 2017). Herein, the management of Smithfield Consultants
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Limited resolves financial problems through management accounting approaches which are as
follows:
 KPI: Key Performance indicators are measurable tool which demonstrates the ways in
which an organisation achieves its business objectives. Any business entity uses such
approach at various levels to track performance procedures. These are the most preferred
indicators of the current accomplishment level of an individual, division and company in
achieving goals. KPI approach helps Smithfield Consultants Limited to formulate and
compare the standards for the purpose of measuring the progress, performance along
with goals of an organisation.
 Benchmarking: It focuses on the continuous improvements for the purpose of achieving
best performances required for maintaining a position in the competitive market for an
organisation. This approach is used by the companies to measure their performances with
various competitors in the identical area of business. It helps in maintaining the quality of
work by providing the awareness in Smithfield Consultants Limited to focus on the
individual and organizational performances to achieve objectives (Meyer and Meyer,
2014).
Comparison between Smithfield Consultants Limited and Hurst Financial Consultancy
Limited.
Basis Smithfield Consultants
Limited
Hurst Financial Consultancy
Limited
Financial issue The financial problem faced
by Smithfield Consultants
Limited are problem of equity
financing and issues in balance
sheet. The control of the
business is with investors and
all the confidential reports are
also to be disclosed with them.
The organisational incomes are
running short as compared
with the expenditures. Such
Hurst Financial Consultancy
Limited faces the financial
problems related to problem of
risk management as well as
problem of debt financing. The
analysts fails to analyse and
formulate various strategies to
minimize or eliminate the
undetermined risk. The
managers are not able to
identify the appropriate
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situations affects the growth
and profitability to sustain for
future in competitive market.
investors (Kokubu and Kitada,
2015).
Approach Smithfield Consultants
Limited needs to overcomes
the financial problems by
applying approach of
benchmarking for preparing
reports which defines the
comparisons to formulate and
implement the effective
strategies for reducing the gap
between competitors for
managing the problem of
equity financing and issues in
balance sheet ( Lowe, 2014).
The managers of Hurst
Financial Consultancy Limited
applies approach of key
performance indicator for
evaluating the comparison and
setting effective strategies
against its competitors in order
to manage its problem of debt
financing and risk
management.
M4. Management accounting in response to financial problems which leads organisation to
sustainable success.
Management accounting approaches includes KPI and benchmarking to set various
frameworks for resolving the problems by taking effective decisions in Smithfield Consultants
Limited and Hurst Financial Consultancy Limited. The approaches benefits both the companies
to achieve the success in such a manner to be prepared to face various uncertain situations.
Smithfield Consultants Limited overcomes its financial issues by applying approach of
benchmarking by preparing reports for reducing the gap between competitors by formulating
and implementing various strategies to achieve the targeted goals. Hurst Financial Consultancy
Limited applies approach of key performance indicator for evaluating the difference and setting
effective strategies against competitors in order to manage its financial problem. Both the firms
applies appropriate as well as effective approaches to settle its concerns to achieve sustainable
success (Bergmann and Guenther, 2015).
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D3. Various planning tools to resolve financial problems.
Planning includes the preparation of various game plans for future by analysing the
current as well as past situations in order to perform distinct operations without any delays.
Smithfield Consultants Limited as well as Hurst Financial Consultancy Limited suffers from
various financial situations which are out of control at the same time unexpected. The executives
of the Smithfield Consultants Limited utilizes distinct planning tools like cash budget, master
budget and zero based budgets to anticipate various unforeseen obstacles for enhancing the
efficiency and upgrading benefits for resolving financial problems efficiently with effectiveness
(Busco and Quattrone, 2015).
CONCLUSION
As per the above project report it can be concluded that management accounting is very
crucial for all kind of organisations. In this project report, different types of management
accounting systems such as cost accounting system, inventory management system concluded as
well as various methods of the reporting also mentioned. Apart from it, income statements also
prepared with the help of absorption and marginal costing method. Along with different planning
tools like cash budgets, master budget and role of management accounting in solving the
financial issues is concluded.
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REFERENCES
Books and Journals
Brierley, J. A. and Gwilliam, D., 2017. Human Resource Management Issues in Accounting and
Auditing Firms: A Research Perspective: A Research Perspective. Routledge.
Busco, C. and Quattrone, P., 2015. Exploring how the balanced scorecard engages and unfolds:
articulating the visual power of accounting inscriptions. Contemporary Accounting
Research. 32(3). pp.1236-1262.
Collis, J. and Hussey, R., 2017.Cost and Management Accounting. Macmillan International
Higher Education.
Farrell, M. and Gallagher, R., 2015. The valuation implications of enterprise risk management
maturity. Journal of Risk and Insurance. 82(3). pp.625-657.
Kieso, D. E., Weygandt, J. J. and Warfield, T. D., 2016.Intermediate Accounting, Binder Ready
Version. John Wiley & Sons.
Kokubu, K. and Kitada, H., 2015. Material flow cost accounting and existing management
perspectives. Journal of Cleaner Production. 108. pp.1279-1288.
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment,
management accounting, control, and reporting. Journal of Cleaner Production. 136.
pp.237-248.
Moore, M. H., 2014. Public value accounting: Establishing the philosophical basis. Public
Administration Review. 74(4) pp.465-477.
Nilsson, F. and Stockenstrand, A. K., 2015. Financial accounting and management control. The
tensions and conflicts between uniformity and uniqueness. Springer, Cham.
Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Rieckhof, R., Bergmann, A. and Guenther, E., 2015. Interrelating material flow cost accounting
with management control systems to introduce resource efficiency into strategy. Journal
of Cleaner Production. 108. pp.1262-1278.
Ross, J. E., 2017. Total quality management: Text, cases, and readings. Routledge.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts
and practice. Routledge.
Smith, M., 2017. Research methods in accounting. Sage.
Tucker, B. P. and Lowe, A. D., 2014. Practitioners are from Mars; academics are from Venus?:
An investigation of the research-practice gap in management accounting. Accounting,
Auditing & Accountability Journal. 27(3). pp.394-425.
Vom Brocke, J. and Rosemann, M. eds., 2014. Handbook on business process management 2:
strategic alignment, governance, people and culture. Springer.
Ward, D. M. and Calabrese, T., 2018. Accounting fundamentals for health care management.
Jones & Bartlett Learning.
Online
Management accounting. 2018. [Online].Available Through: <https://www.quora.com/What-is-
management-accounting>
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