Preparation of Income Statements with Different Costing Scheme

Management Accounting
Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1

P1 MA and essential requirement of 4 MA system....................................................................1
P2. Various method of management accounting reporting.........................................................3
TASK 2............................................................................................................................................4
P3. Preparation of income statements with different costing scheme.........................................4
TASK 3............................................................................................................................................7
P4 Advantages and disadvantages of different planning tools used for budgetary control .......7
TASK 4............................................................................................................................................9
P5. Comparison between organisations regarding using of MA system to solve problems. .....9
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................12

INTRODUCTION
The methodology related with determining the important and useful financial and non
financial information into proper record to make valuable decisions is known as Management
accounting (Carlsson-Wall, Kraus and Karlsson, 2017). It is a detailed process in which different
types of MA system are applied by the manager of company to prepare important report which
help in assessing the main information at different business situation. The report in based on
Katie Walker Furniture that use to produce designer furniture in UK.
In this report, different sort of MA system and their effective benefits are defined which
are used to prepare several important reports which are also discussed in this report. Report also
cover different costing techniques which is used to prepare income statements and most
importantly various planning tool is used within organisation to prepare budgets. In addition,
MA system are used detect and overcome several financial problems faced by company.
TASK 1
P1 MA and essential requirement of 4 MA system.
“Management accounting inform the elaborated and regular financial strength and status
of company to leading parties” (Management accounting, 2020).
“Management accounting is a procedure of setting up management accounts and reports
that give faithful and punctual non-financial and statistical data to administrator to form short
and long term decisions”.
From the above two definition, it has been clearly started that MA is a method which is
related with forming of crucial report that hold detail information about monetary and non
monetary aspect of business in order to make better decision (Goh and Scerri, 2016). There are 6
important function of MA that are discussed underneath:
 Financial management: The finance manager must organize and adjust the necessary
elements of the P&L report, income statement. Of instance the information are provided
to finance manager in a most comprehensible manner, which simplifies in managing the
financial information throughout the year.
 Auditing: The data presented is needed to be modified by the manager according to the
expectation which help in auditing. In order to complete the audit process manager use to
1

modify the data according to accounting principle and standards which help in making
useful decision.
 Planning: The business advisor provides sufficient information to help determine the
company's future. Including administrators of all company prediction details for business
purposes.
 Cost accounting: Comparative and can size statements are structured to make effective
representation results. Such as executives of organization use the ratio to predict the
patterns in cost and make certain polices to reduce and lower the cost to increase
profitability.
 Controlling: This is the main function of MA is related with controlling the company
resources and performance of employees and worker. Like manager use to control and
manage the valuable resources which support in better functioning of operations. Decision making: In last the useful data and relevant information is communicated and
distributed to employees to maximise the results and make valuable decision for
increasing the overall efficiency and affectivity (West, 2018). In respective firm modified
data is given to each member at different level in order to increase the total profit and
make judgement to improve customer base.
Difference between Management accounting and financial accounting.
Financial accounting Management accounting
In this process reports are formulated which
are used by external parties like stakeholders,
investors etc.
It is related to preparation of reports which are
used by internal manager to make better and
sound decision.
Financial accounting is primarily concerned
with reporting for the company as a whole.
Managerial accounting forces much more on
the parts, or segments, of a company.
Management accounting consists of multiple systems that help fulfil multiple
management and accounting standards for successful decision-making purposes. These are
detailed discussed underneath:
Cost Accounting system: It is also regarded as a commodity pricing method which is
utilizes by company for estimating cost of their products that help in cost regulation, profitability
assessment and product assessment. In Katie Walker Furniture, this system can be used to
2