Management Accounting: Types, Techniques, and Tools for Financial Planning

Management Accounting

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY..................................................................................................................................................3
Part 1...........................................................................................................................................................3
Types of Management Accounting systems along with essential need. .................................................3
Distinction between management accounting and financial accounting:...............................................4
Types of Management Accounting systems: ...........................................................................................4
Management Accounting reporting:........................................................................................................5
Benefits of MAS:......................................................................................................................................6
Integration of MAS and MA reports.........................................................................................................6
Part 2...........................................................................................................................................................7
Accounting techniques to prepare financial reports................................................................................7
Management Accounting techniques used in order to prepare all the financial reports......................11
Interpretation of data............................................................................................................................11
Part 3.........................................................................................................................................................11
Various tools of planning.......................................................................................................................11
Planning tools for forecasting budgets..................................................................................................12
MAS to solve financial issues. ...............................................................................................................13
Accounting techniques:.........................................................................................................................13
Comparison:..........................................................................................................................................14
To figure out financial problems MA is used..........................................................................................14
Planning tool to figure out financial problems.......................................................................................14
CONCLUSION.............................................................................................................................................15
REFERENCES..............................................................................................................................................16

INTRODUCTION
Accounting is defined as the procedure that mainly deals with recording of financial
transaction of an organization. In addition to this, the process of accounting involves analyzing,
reporting and summarizing these transaction in order to overlook the financial condition of a
company (Agrawal, 2018). It is stated that management accounting uses those approaches of
accounting that are responsible for tracking financial and non-financial records of the
organization. In the present report, Innocent drinks limited is chosen as a base company which is
a client of AJ and Sons that give accounting and consultancy services. The report will
categorized into three parts, on the first part there is discussion about management accounting
system and reports. In addition to this, the second part is associated with financial techniques
along with its implications on particular data. In the last and third part, contribution related to
planning tools and management accounting system were elaborated in a proper manner.
MAIN BODY
Part 1
Types of Management Accounting systems along with essential requirements.
Management Accounting- It is defined as an effective accounting that mainly used to
collect and assess all needed information which basically arise during financial year. In addition
to this, it is the procedure that is conducted by a company for developing internal accounting
reports which is significant for growth as well as success of an organization.
Purpose of Management Accounting- It is determine that management accounting is
used for the planning of future requirements of an organization by using financial information
which are given to plan budget & execute strategies to enhance profitability. Another purpose of
management accounting is directing and motivating staff members in a proper manner.
Moreover, it is analyzed that it is the procedure that act as controlling mechanism for an
organization which leads to improvement in performance level of a company.
Distinction among management accounting & financial accounting:
Dimension Management Accounting Financial accounting
Users It is basically an accounting It is determined that financial accounting

procedure that is designed as well
as developed for all internal
stakeholders (Gogaev, 2019).
method is used by both external and
internal stakeholders.
Regulations For preparing such sort of
accounting, it is analyzed that no
rules & regulations are used.
It is determine that financial accounting
involves different forms of regulations
that is required to be undertaken by
accountant at the time of preparing
reports.
Type of
company
Management accounting used and
implemented by any form of
business entity.
This form of accounting system needs
special and particular business entities
that are listed in stock exchange.
Types of Management Accounting systems:
It is stated that management accounting is an appropriate as well as effective accounting
system that are associated with each segment of an organization. It involves various number of
accounting system, which are as follows: Cost accounting system- This accounting system is basically developed with a process of
tracking & controlling overall expenses that occur in an organization in an accounting
cycle. This system involve recording of cost of the item and compare standardized cots
that is easy for identifying efficiency as well as progress of different activities in relation
to the expenses. With reference to Innocent Drinks, its finance manager can gather data
or information by the assistance of accounting system that is associated with the cost of
different activities.
Essential requirement- The requirement of cost accounting system is to effectively and properly
control unnecessary expenses that as a result enhance revenue of the company. In context to
Innocent Drinks, such accounting system assist in declining additional cist and expenses of
unwanted activities. Inventory management system- It is a form of accounting system that is mainly related
with managing of all kind of stock of the company (Hutaibat and Alhatabat, 2020). It is
determine that it can properly done by the assistance of recoding of each stock on basis