Management Accounting: Systems, Methods, and Planning Tools

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1. Describing MA and an essential requirement of its system .................................................3
P2. Explaining several methods for the MA reporting ...............................................................4
M1. Evaluating advantages of MA system and its application within organization...................5
D1. Critically evaluating integration between reporting and systems of MA ...........................6
LO2..................................................................................................................................................6
P3&M2. calculating profits by applying marginal and absorption costing ................................6
LO3................................................................................................................................................10
P4. Explaining advantages and the disadvantages of the several planning tools ......................11
M3. Analysing uses of various planning tools ..........................................................................12
LO4................................................................................................................................................13
P5. Comparing the organization that adopts MA systems in resolving financial problem .......13
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting referred as the process of assessing the costs of the business and
the operations for preparing an financial report for internal management. The present report is
based on different aspects of the MA that involves concept and essential of MA systems.
Moreover, it highlights computation of the profits with an application of the marginal and
absorption costing tools. The study also presents different planning tools and systems that helps
in resolving the financial problems.
LO1.
P1. Describing MA and an essential requirement of its system
MA refers to the principle that involves framing and providing the timely statistical and
the financial information to the managers of the business in order to make routine decisions. The
main elements that are included in management accounting are decision making, planning and
controlling.
The main functions of the MA systems is to facilitate data, modifies or alter the data,
interpret and analysing data which serves as the means of a communication, facilitating control
on accounts and provides for quantitative as well as qualitative information.
Financial accounting system means the system in which financial data of an entity is
been maintained. The main purpose of this process is to teach process in respect of maintaining
the financial accounts in the system (Cooper, Ezzamel and Qu, 2017). It means the procedures
and a system that is designed for an auditing and the internal control of the company.
Cost accounting system involves two types of the methods that are as follows-
Product Costing- It means the process of accounting that involves identification of all
the expenses of the business relating to production of an entity's products. For example- cost of
raw material, transportation cost, worker wages etc.
Activity based costing- It is the method which determines an activities within the
organization and assigns cost for each of the activity towards all the services and the products in
accordance to actual actual consumption by every activity. It is the method that tracks an
overhead costs to the activities and assigning it to the objects.
MA systems acts as the decision support system which helps in ensuring control on an
organization with management of an investment and the profitability.

Tax accounting- This type of accounting includes adjustments in relation to partnerships,
international taxation, individuals, corporations (Maas, Schaltegger and Crutzen, 2016). Each
and type of business has to follow the provisions of tax accounting in an appropriate manner for
operating their business in compliance with rules and regulations.
P2. Explaining several methods for the MA reporting
Budget report- It is the report that involves estimation of the expenses and the income so
that proper controlling can be ensured by the firm. It act as crucial as it helps the managers in
reviewing the actual income and expenses with that of the budgeted figures in order to avoid
financial gap.
Performance report- This report is created for analysing the performance of an
organization as well as the employees at the period end (Mirzaey, Jamshidi and Hojatpour,
2017). It helps in creating effective strategies by the managers for reaching to the mission of the
company.
Accounts receivable report- This report includes details regarding the remaining balances
of the clients that are due. By preparing this report, manager could be able to identify defaulters
and in finding out the issues in company's process of collection.
Purpose and the use of financial statements
Trading account- This account is formulated for determining amount of the gross profits
and the losses that are made by a business within an accounting period. It is used for ascertaining
information relating to opening stock along with closing stock value.
Profit and loss account- The main purpose of preparing this account is to summarize the
expenses, revenues and the cost that are incurred in a particular period (Panchenko, 2018). Such
records facilitates an information about an ability of the company in generating the profits by
way of increasing the revenue, lowering cost etc.
Cost of sales- It means the cost incurred in producing the goods that are sold by the firm.
The main purpose of computing cost of sales is to ascertain an accurate cost in selling the goods
so that accurate value of gross profits could be attained. It is used for calculating gross profits fro
the company.
Balance sheet- The foremost purpose or objective of framing balance sheet is to assess
the financial position of an enterprise. It is used by the external parties in order to analyse the
financial state of an enterprise.