Management Accounting Systems and Techniques

MANAGEMENT
ACCOUNTING
SYSTEM AND
TECHNIQUES

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting and different types of management accounting systems:..............1
P2: Different methods for management accounting reporting:....................................................3
M1: Benefits of management accounting system and their application within an organisation: 7
D1: How management accounting system and management accounting reports are integrated
within an organisation:.................................................................................................................8
TASK 2............................................................................................................................................8
P3: Techniques of cost analysis to prepare an income statement:...............................................8
M2: Range of management accounting techniques for financial reporting:..............................10
D2: Explanation of financial reports in range of business activities:........................................10
TASK 3..........................................................................................................................................10
P4: Different types of planning tool and their advantages or disadvantages:............................10
M3: Planning tools and their applications for forecasting and preparing budget:.....................12
TASK 4..........................................................................................................................................12
P5: How organisations are adapting management accounting systems in respond to financial
problems:....................................................................................................................................12
M4: Analyse financial problems in management accounting can lead organisation to
sustainable success:....................................................................................................................14
D3: How planning tools helps in to solving financial problems:...............................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is an internal system that provides critical information to firm's
management so that it can used in operations decision making. Organisations uses it to measure
and evaluate its performance according to information. It involves preparation of financial
reports, decision making and activities within an organisation. Company which is selected for
this report is Capital joinery Ltd. It is firm that specialised in windows, doors and stairs. It was
founded in 2008, situated in London UK (Vetrov and 2017). This report covers various topics
such as requirement of different types of management accounting systems, method for used
management accounting reports and different cost techniques to prepare an income statement.
Apart from this it also covers different planning tools and their advantages or disadvantages and
the ways in which organisations adapting management accounting system to respond to financial
problems.
TASK 1
P1: Management accounting and different types of management accounting systems:
Management accounting is refers to preparation of business reports that helps
management to generate its business operations and helps in short term and long term decision
making. It helps in planning, managing, measuring, evaluating and interpreting information to
managers.
Management accounting system is an internal system of any firm that an organisation
used to measure and evaluate its operations or activities for the management of the entity. In
context to Capital joinery Ltd., management team of the firm uses this system to evaluate firm's
operations so that it can achieve its goals or objective in efficient manner. It provides an insight
towards organisations decisions that helps managers to take corrective actions. It also provide
financial health and statical information assist by strong software that supports an organisations
decision making. It divides overall business unit into different departments on the basis of
production and functions so that it will be easy for Capital joinery to evaluate its performance.
Management accounting principles that company used are influence, relevance, value and
trust. Influence means it provides an insight that is influential, Relevance it gives relevant
information, value is analysed and in context to trust is it generates trust by providing overview
and relevance information.
1

Basis Financial Accounting Management accounting
Information mainly used for Information is use for external
parties of firm. External parties
such as shareholders,
customers etc (Upping, and
Oliver, 2016). Capital joinery
used it to show its business
position to shareholders.
Information is used by internal
parties. Internal parties
includes supervisors or
managers, employees who is
working in operations etc. the
firm is used it for internal
decision making.
Purpose of information To record the financial
performance of the period and
past performance of the
business for external parties.
It provides planning,
evaluating and controlling
process for the firm.
On the basis of time It is based on historical data.
Such as profit and loss
accounts, balance sheet and
cash flows. Capital Joinery
used on the basis of past
performance revenues and
expenses.
It used for future decisions.
Basically, includes firm's
operations and activities. Firm
used its for future decision
making for effective outcomes.
Area specialised The reports prepares on the
entire business.
It focuses on specific areas of
the firm. Area can be specified
by on the basis of function,
activities etc.
Different types of management accounting systems: There are various types of
accounting system that are:
Cost-accounting system: This is a management accounting system used by firms to
estimate its value for products to know about the profitability of the firm, inventory valuation
and cost controlling. Capital Joinery Ltd. Used this for setting its pricing strategy to analyse
2