Management Accounting Systems and Its Applications

Management
Accounting Systems
And It's Applications

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................7
TASK 3..........................................................................................................................................13
TASK 4 .........................................................................................................................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
The term management accounting (MA) is a way of accounting in which
companies all kind of transactions' information including monetary and non monetary
aspects is recorded in a systematic manner (Yigitbasioglu, 2017). Under this accounting
the purpose of recording these information is to produce internal reports that may help
to management department in effective decision making regards to different context.
The aim of project report is to spread out information about role of MA for business
entities. For better understanding a company has been selected that is KEF limited. The
company operates in manufacture sector. The report covers detailed information about
various management accounting systems (MAS), MA reports and planning tools. Along
with role of MAS in sorting monetary issues is also described under the report.
TASK 1
Introduction of MA:
MA and its definition.
MA – This accounting is a systematic process of recording and presenting quantitative
& qualitative information in the form of internal reports. It is not essential for companies
to apply this accounting in their operations.
Definition of MA:
According to Charted Institute of Management Accountants (CIMA), MA is “the way of
identify, analyse, producing, interpretation of information that is needed by managers in
order to plan and control in a business entity.”
MAS – The term MAS can be defined as those accounting systems which aligns with
business operations and provide framework to managers in effective management
(Nielsen, 2015).
Importance to integrate MAS with organisations:

This is important for businesses to integrate different accounting systems with
their operations and activities. Such as for finance department, it is important to link cost
accounting system so that expenses can be controlled. As well as for production
department, inventory management system can guide in order to manage overall stock.
Like in KEF limited company, they are using these accounting systems in their different
operations and activities.
Principles, role and origin of MA:
Principles- There are mainly four kind of principles of MA and each business entity is
needed to comply with these principles:
 Influence- This principle of MA defines that it is important to communicate
accounting information among managers so that they can take corrective actions.
 Relevance- In addition, this principle states that MA evaluates the key
information that can be helpful for better decision making in companies
operations (Cazier, Tian and Wilson, 2015).
 Value- This principle of MA states that it links the company's process to its key
models and demands of the wide economic environment.
 Credibility–According to this principle, if companies apply the MA in their
operations and activities then it becomes easier for shareholders to relay on
financial outcomes.
Role - The role of MA is too crucial and important for businesses. This is so because it
provides essential framework to users in order to manage different aspects. Like the
above KEF limited company is using this accounting system for gaining competitive
advantage over their rivalry firms.
Origin- The MA evolved after financial accounting and its origin can be traced before
300 years ago. This accounting was firstly used during industrial revolution in the aspect
of European merchant trading ventures.
Difference between management and financial accounting:
Basis MA Financial accounting
Information Under this accounting information While in this accounting only