Management Accounting System and its Essential Requirements in Business

This presentation provides an overview of management accounting system and its essential requirements in business. It explains the meaning and advantages of management accounting, as well as different types of management accounting systems and their key requirements. The presentation also discusses different methods of management accounting reporting.

MANAGEMENT
ACCOUNTING

INTRODUCTION
 Management accounting is the systematic presentation of
financial activities in such a manner that provides useful
information to manager in taking rationale decisions.
The purpose of this accounting is to assist internal
management in forming policies and strategies. The
present report will cover meaning, advantages and
requirements of management accounting system.

P 1 MANAGEMENT ACCOUNTING SYSTEM AND
ITS ESSENTIAL REQUIREMENTS IN BUSINESS
 Management accounting
 Management accounting is a branch of accounting which
helps the management in taking managerial decision relating to the
financial position of the company.
 Management accounting system
 Management accounting system is a system of accounting which
deals with the analysing and controlling the internal system of
the business including various resources of the business are
needed to operate the regular operations of the company.

CONT..
 Requirements of management accounting system
 Management accounting system plays a vital role in the success
of the company. Each firm needs inclusion of a better management
accounting system in order to enhance its financial position over a time.
 Types of management accounting system and their requirements
 Cost accounting system, inventory accounting systems, job
costing systems, price optimization system, etc. are the various types of
management accounting systems which could be adopted by the
company in order to enhance its capacity and efficiency at various
departments of the business. Key requirements of these management
accounting system are as under:
 cost accounting system
 Cost accounting system deals with the analyzing the cost
efficiency of the business and developing plans for the company in
order to make it more cost efficient.

CONT..
 Inventory management system
 It is the system which deals with the planning and
controlling the inventory of the company. With the help
of it, company can record the flow and requirement of
inventory in the firm. By maintaining the inventory
accordingly company can reduce the risk of insufficiency
of the stock in the business.

CONT..
 Job costing system
 It is the system with the help of which company can
determine cost incurred by the company in
performing each job or manufacturing a particular lot
of the product or services.

P 2 DIFFERENT METHODS OF MANAGEMENT
ACCOUNTING REPORTING
 Management reporting
 Management reporting is a process of
management in which deals with documentation of all
the relevant information to the managers including
finacial reports and reports of different accounting
systems of the business .
 Methods of management reporting
 There are various ways to present the management
reports like, written, oral, graphical, group discussions,
etc. managers can make their management report using
any of these methods.

CONT..
 Oral reporting
 It is the simplest method of transforming
informations of business. In this method of reporting,
managers transfers all the informations in verbal form.
Group discussions, meetings, conversations are different
ways to present the management reports in oral form.
 Written reporting
 It could be termed as the best method of
reporting. It is also most common method of presenting
the management reports.

CONT..
 There are various types of written reports like:
 Accounts receivable reports:
 Budget reports
 Job cost reports
 Inventory management reports
 Graphical reporting

CONCLUSION
 From the above study it can be concluded that with the
help of adoption of management accounting systems,
company can achieve organisational objectives in the
most efficient way. There are various methods of
managerial costing which can be adopted by the business
for the purpose of cost controlling.

REFERENCES
 Akhmetshin, E. M. and Osadchy, E. A., 2015. New requirements
to the control of the maintenance of accounting records of the
company in the conditions of the economic
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 Doluwarawaththa Gamage, S. D. and Gooneratne, T., 2017.
Management controls in an apparel group: an institutional theory
perspective. Journal of Applied Accounting Research. 18(2).
pp.223-241.
 Bedford, D. S., 2015. Management control systems across
different modes of innovation: Implications for firm
performance. Management Accounting Research. 28. pp.12-30.
 Collis, J. and Hussey, R., 2017. Cost and Management
Accounting. Macmillan International Higher Education.