Management Accounting - Excite Entertainment Ltd
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Added on 2020-10-23
Management Accounting - Excite Entertainment Ltd
Added on 2020-10-23
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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1LO1..................................................................................................................................................1P1 Management accounting and essential requirements of different types of managementaccounting systems......................................................................................................................1P2 Different methods used for management accounting reporting............................................4LO2..................................................................................................................................................6P3 Calculate costs using techniques of cost analysis to prepare an income statement usingmarginal and absorption costs......................................................................................................6LO3..................................................................................................................................................8P4 The advantages and disadvantages of different types of planning tools used for budgetarycontrol..........................................................................................................................................8LO4................................................................................................................................................11P5 Excite Entertainment Ltd are adapting management accounting systems to respond tofinancial problems......................................................................................................................11CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONManagement accounting is a process which analyses cost of business and operations inorder to prepare internal financial report to help managers in decision making and to achievetheir goals of business (Firk, Schrapp, and Wolff, 2016). In this report Excite Entertainment Ltd.Company is taken for better understanding. Excite Entertainment Ltd is a company whichoperates in entertainment and leisure industry in the country UK. The activity of promotion ofconcerts and festivals emphasis on Management accounting and financial accounting. Thedifference between both accounting will also explain in this report. The report will alsodiscussing about different methods used for management accounting report. Also, a calculationbased on appropriate techniques of cost analysis in order to prepare an income statement by theuse of absorption and marginal costing will be highlighted in this report. The advantages anddisadvantages on different types of tools for planning which is used for budgetary control will bediscussed in this report. A comparison on adapting management accounting system by ExciteEntertainment Ltd to respond financial problems will be discussed in the report.LO1P1 Management accounting and essential requirements of different types of managementaccounting systems.Management accounting“The management accounting includes the concept and methods which are necessary forplanning in effective manner and to choose the best alternative action of business and alsocontrol by the interpretation and evaluation of performance.”Financial accounting“It is a that specialized accounting branch which keeps on track of financial transactionsof a company. The transactions are firstly recording then summarized and at last presented infinancial statement or report which are Balance sheet or income statement.” Difference between management accounting and financial accountingBasis MANAGEMENT ACCOUNTING FINANCIAL ACCOUNTINGLegalrequirementThe reports are used internally inthe organisation and they does notneed any legal requirement. The rules which are in financialaccounting prescribed byGenerally accepted accountingprinciples and International1
financial reporting standardStandards. Legal requirement arethere in financial accounting forthe companies like companyExcite entertainment follows theselegal requirements.Format ofpresentationThe management accountingdoes not follow any format forpresentation of managementinformation.The financial accounting in Exciteentertainment Ltd follows aspecific format for recording andpresenting information. Area ofcoveragewithin theorganisationManagement accounting isconcerned with specific area foranalysis. The area may vary fromgeography, product line,manufacturing unit, etc. The financial accounting isconcerned with business as awhole. Accounting standardsbound the organisations toreporting in area in set formats. Type of datausedIn management accountingquantitative data as well asqualitative data is used. In financial accounting onlyquantitative data of ExciteEntertainment Ltd is used. Cost accounting systems – It is a framework which is used by different firms in order to estimatecost of products for analysis of profitability, cost control and valuation of inventory. Costaccounting system works through tracking of raw materials by going through stages ofproduction and turns slowly into finish goods (Janin, 2017). The accounting entry in ExciteEntertainment Ltd for whenever raw material put to production this system of cost accountingrecords immediately use of materials through crediting raw material account and debit goods inprocess account. Direct cost is one of the type of cost which is related with production of goods andservices. It includes labour, distribution cost which is associated with product while production,cost of materials used in production, direct expenses. This cost is easily traced by a project,department or a product. In addition to direct cost derive inventory value and is not allowedunder International financial reporting standard (IFRS) and Generally accepted accounting2
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