Management Accounting: Systems, Methods, and Applications

MANAGEMENT
ACCOUNTING
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Section one...................................................................................................................................3
1.1. ...............................................................................................................................................3
1.2.................................................................................................................................................4
1.3 ................................................................................................................................................4
1.4.................................................................................................................................................5
2.1. ...............................................................................................................................................5
2.2. ...............................................................................................................................................8
2.3 ................................................................................................................................................8
2.4.................................................................................................................................................9
Part 2..............................................................................................................................................10
3.1...............................................................................................................................................10
3.2 ..............................................................................................................................................11
4.1...............................................................................................................................................11
4.2...............................................................................................................................................12
4.3 ..............................................................................................................................................13
4.4 ..............................................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16
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INTRODUCTION
Management accounting refers to that aspect of accounting which provides financial
information for the purpose of relevant decision making by the managers in the organisation. It
can be defined in different ways like the application of professional knowledge and skills while
preparing financial reports that could aid internal management of the business in framing
strategic policies along with carrying out effective planning and controlling the operation of the
concern (Pasch, 2019). Costing, budgeting and variance analysis are some of the tools and
techniques of management accounting. In this report, the various management accounting
systems, methods of preparing financial reports along with the preparation of financial reports
using tools and techniques of MA will be discussed. Also, it will be explained how these MAS
can be applied within organisation and how it helps in improving the performance of the concern
which leads to sustainable success for the organisation. This report will be based on The London
College, UK.
MAIN BODY
Section one
1.1.
Management accounting is the process of analysing the financial statement of the
company with the help of systems in order to take decision. For this purpose, the company have
to appoint the well qualified managers (Ammar, 2017). The requirements of management
accounting systems are including the following which helps the managers of The London
College in achieving their goals:
 The managers of the London college use the MA information for the purpose of creating
and analysing the budgets and forecasts in order to plan, organise and control the
business strategies.
 In order to analyse the data, they also use the variance analysis and break even analysis
tool so that they can identify the performance of the business is under or over
performance or balance (Yoder, and et.al., 2017).
 With the help of accounting systems, they complete their work in less time and also
without any error. It is because the manual work involves lots of mistakes and errors.
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 The systems record the performance of each employee on daily basis. So mangers use
this to visualize the performance of employees and further motivate them for the same.
 In case if the actual and planned performance have any gap and such gaps are
controllable, then the company motivates their employees in order to improve their
efficiency.
1.2
Management Accounting reporting methods
Inventory management system: It is the system of reporting the inventory movement in and
from the business, where the store manager tracks and simultaneously reports the inventory
throughout the chain of supply that is right from inventory acquisition to production to end sales.
By overseeing the inventory of the business, the management undertakes to ensure that there
would be no situations like under stocking and over stocking (Hlaciuc and et.al., 2017).
Job costing system: It refers to that system of costing where the overhead costs are assigned to
specific jobs or to various cost pools. This costing method is suitable where there are various
tasks or jobs or contracts are performed under one head.
Price optimization: Here the price of the products or services are determined by studying how
the variations in a demand is occurring due to corresponding change in the level of price. These
data of demand variations when combined with the cost related and available inventory levels in
order to determine and reach at an optimum price level (Li, 2018).
1.3
Benefits and application of management accounting system
Relevance: MA provides for key insights into a company's internal management to help
managers in decision making activities. They provide support in accomplishing decision making
tasks by providing useful information related to financial health (Gatti, 2018).
Updated information: As management accounting is done throughout the year, so it provides for
up to date information to the financial decision makers regarding various aspects of the business
operations.
Reliability: MA accounting reports and budgets as prepared on the basis of past information and
future estimations are done on the basis of these information, so there is a factor of reliability
which is ensured by management accounting systems (Dearman, Lechner and Shanklin, 2018).
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