Management Accounting: Role, Functions, and Techniques

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................5
TASK 3............................................................................................................................................8
TASK 4..........................................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The management accounting is a form of accounting which is associated with gathering
and analysing of financial & non financial information about companies' transactions in order to
prepare internal reports (Aouni, McGillis and Abdulkarim, 2017). This is the main function of
MA because its objective is to helping companies' managers in decision making by providing
reliable informations. This accounting is not essentially required in companies as other
accounting methods. The objective of project report is to spreading information about role and
functions of MA in the aspect of companies operations and activities. In the project report
various types of MAS , MA reports, planning tools of budgetary control are included. For better
understanding of these tasks a company is chosen which is Excite entertainment limited that
operates in entertainment industry. This company is located in United Kingdom.
MAIN BODY
TASK 1
Section (A)
(a) Comparison between management accounting and financial accounting
Basis Management accounting Financial accounting
Legal
requirement
The management accounting is not
essential for companies to implement
in their operations. It depends on
companies' willing whether they want
to apply this accounting or not.
On contrary, the financial accounting
is essential for companies to apply in
order to produce financial statements.
Format of
presentation
In this accounting, internal reports are
prepared without any particular format.
While in financial accounting,
financial reports are prepared as
accordance to international financial
reporting standards.
Types of data
used
Under, management accounting both
types of data including monetary and
On the other hand, in financial
accounting only monetary information
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non monetary are used in reports. is included.
Different types of MAS :
(b) Cost accounting system – This is a kind of accounting system that links with companies'
financial department because it predicts possible expenses (Vann, 2016). On the basis of it,
business entities allocates their funds in various kind of activities and operations. In addition, this
accounting system is compulsory for companies to apply because of its importance for finance
department as by use of information provided by this accounting system they can focus on those
activities which are high cost consuming. Under this accounting system, various costing
techniques are included such as absorption and marginal costing. Both these techniques help in
the aspect of better decision making regards to fund management. Like the above Excite
entertainment limited company is applying this accounting system in the aspect of controlling
and reducing their expenses as accordance of standard cost.
(c) Inventory management system – It can be defined as a type of accounting system that assess
the information about companies stored material in warehouses and provides guidance to
companies' managers for effective management of inventories (Arunruangsirilert and
Chonglerttham, 2017). This is too crucial for companies because in the absence of it, business
entities can not control storage cost. Basically, the inventory management system consists
various kind of techniques such as just in time, perpetual inventory management system and
periodic inventory system. All these techniques play a significant role for companies in order to
better management of their materials. The just in time technique is important for minimising time
of manufacturing. As well as the perpetual inventory system helps in keeping inventory records
up to date. Like in the aspect of above Excite entertainment limited company, they are managing
their inventories by help of these techniques.
(d) Job costing system – This is a kind of accounting system which is related with process of
computing cost of each job involved in different business activities (Nakajima, Kimura and
Wagner, 2015). In addition, it is mainly used for those companies in which large number of
products are produced. Due to this accounting system price of each unit is being calculated
individually. The job costing system is required in companies for proper assessment of cost
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