Management Accounting and Reporting Methods

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P.1. Explain management accounting and describe what are the essential requirements
of different types of management accounting system?.....................................................3
P.2. Describe the methods used to do management accounting reporting?....................6
TASK 2............................................................................................................................................7
P.3 With the help of appropriate techniques of cost analysis calculation of costing is done
for the purpose of preparing income statement by using marginal & absorption costing?
................................................................................................................................................7
TASK 3..........................................................................................................................................11
P.4. Planning tools used for budgetary control with their advantages & disadvantages?
..............................................................................................................................................11
TASK 4..........................................................................................................................................13
P.5. Company how the firm or concern respond to financial issues by adapting the
system of management accounting?..................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Management Accounting is the accounting in which information is given to managers for
the specific purpose. It shows the updated financial standing of business to outsiders like
shareholders, merchant bankers, Guarantors, debenture holders etc. There is no particular format
to perform management accounting. In the organisation when there is need to take short and long
term decisions it is mandatory to consider the activity of Management Accounting. Its best
practices reflect important information related to leadership and control (Brierley, 2017). Capital
Joinery Ltd is the manufacturing company that gives huge variety in doors, stairs, windows with
different designs. It was established in London. The project covers the topic like definition of
management accounting and the essential need of various kinds of management accounting
system, management accounting reporting methods, ascertainment of cost by using techniques to
prepare an income statement by taking absorption and marginal cost. Definition of budget and
budgetary control is explained in this assignment along with describing types of tools of planning
used for budgetary control with their advantages and disadvantages. How the company adapt this
system to respond financial issues are also explained with the help of comparison in the project.
TASK 1
P.1. Concept of Management accounting and describe the essential requirements of
different types of management accounting system?
By joining two words management and accounting this new term is created. It is
concerned with the presentation of abilities and professional knowledge so that information
related to accounting can easily be reveal which supports the management team at the time when
they formulate policies and perform planning as well as controlling in respect of undertaking. It
links management with accounting because to take managerial decision there is need for
accounting information as it’s a subject matter of management accounting (Dierkes and
Siepelmeyer, 2019).
Management accounting and financial accounting difference.

Basis Financial accounting Management accounting
Regulation According to standard it is
prepare
By any law it is not regulate
Audit Their audit is mandatory It is not subject to audit
Contents It covers only that information
which are related to money.
It include both non monetary
as well as monetary
information
Users Regulators, merchant bankers,
shareholders are their users
Internal team of management
are the users.
Mandatory Preparation & presentation is
compulsory
It not require presentation.
Purpose For the purpose of external
reporting it is prepare.
For internal purpose it is use
Different examples of management accounting system are explained in details as follows
Cost accounting system: It provide costing related information when the activity of
production is carried out in the organisation. Most of the manufacturing concern adopt this
system to calculate products costing. Profit can be determined only if know about the cost. This
system is useful when the value of finished product, semi-finished item and raw material is
determined. This also helps at the time of preparation of financial statement (Pleis, 2019).
Their essential requirements are:
 It gives cost related information.
 It is adopted by manufacturing companies.
 Cost helps in calculating the profits.
 Beneficial to take decisions regarding machines and labours (Petratos and Faccia,
2019).
System of inventory management: