Management Accounting Technique - Doc

Management Accounting

INTRODUCTION
Management accounting is a technique that provides timely and valuable information to
managers and internal stakeholder of an organisation which is required to make decisions. In a
company different reports are generated that are required to analyse performance and position
and these reports consist different informations such as total receivables, available cash, total
revenues and cost incurred while manufacturing a product or performing operational activities. It
is very important for a company as it may lead the business toward success. Company for this
project report is Ever Joy Enterprises (UK), that operates in leisure and entertainment industry in
UK.
In this project report different topics are discussed such as Management accounting
system and its reports, various costing techniques, planning tools used in budgetary control and
how organisations can use management accounting system to resolve financial problems
(Amidu, Effah and Abor, 2011).
TASK 1
P1
Management accounting: It is the process of maintaining managerial reports which
communicates accurate and relevant information about the actual position of company to the
management on timely basis. It assist them to make an effective decisions and suitable plans to
achieve growth and strong financial position of an organisation.
Therefore, it is important for Ever Joy Enterprises (UK) as well to form a management
for accounting so that the information of each and every transactions made by their different
departments are easily identified. It enable company to maintain their strong financial presence
in competitive market through correcting the deviations founded by the management while
analysing all accounting transactions. Preparing managerial reports is well supported by various
management accounting systems such as cost accounting, inventory management system, job
costing system etc. But before explaining these accounting systems, it is very important to
differentiate the management accounting with financial accounting due to having little confusion
related with their concepts (Callahan, Stetz and Brooks, 2011).
Difference between management accounting and financial accounting:
Basis of comparison Management accounting Financial accounting
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Meaning It is a technique of preparing
managerial reports to
communicate relevant and
accurate information to the
management to assist them to
make an effective policies to run
the business more effectively.
It is a process of maintaining financial
statements such as Profit & Loss a/c,
Balance sheet etc. so as to determine
true and fair financial position of
company.
Information It includes both monetary as
well as non-monetary
information.
It includes only monetary information.
Users Management accounting is done
for internal stakeholders of the
company.
Financial accounting is done for
external stakeholders of the company.
Mandatory It is not compulsory for an
organisation.
It is compulsory for every
organisations such as Ever Joy
Enterprises..
Objective It helps to analyse cost
information to make strategic
decisions.
It helps to examine financial
statements of a company to determine
actual financial strength.
Various management accounting systems:
Cost accounting system: It refers to such system which identifies the cost incurred in
different business functions which makes easy for managers to prepare an effective budget for
future time period. Using such system by the management of Ever Joy Enterprises (UK) help in
recording, categorising, estimating the cost of business operations so as to achieve huge
profitability. Such system is classified into three costing methods which includes normal, actual
and standard costing. Ever Joy Enterprises (UK) is engaged in providing leisure and
entertainment activities thus can be uses such system in tracking flow of funds invested in
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