The Management Accounting - Doc

MANAGEMENT
ACCOUNTING

INTRODUCTION
The management accounting can be defined as a type of accounting system that involves
monetary and non monetary information which becomes basis for internal decision making
(Bennet and James, 2017). Eventually, this accounting system has a significant role in the
internal management of the organisations. Herein, the project report Excite Entertainment Ltd.
company is selected who is a client of a leading accountancy firm. The company deals in
promotion of concerts, festivals at different locations of UK. Additionally, basic aim of the
project report is to provide detailed information about the various kind of management
accounting system as well as about methods of management accounting reporting and role of
management accounting in solving the financial issues. Apart from it, project report consists
information about income statement of Excite entertainment limited company from both the
methods including absorption and marginal costing method.
TASK 1.
Section (A) Explanation of the management accounting system.
(a) Comparison of management and financial accounting system.
Management accounting system- It is also known by the managerial accounting system.
Generally, management accounting system is related to the collecting, reviewing and interpreting
the needed information for internal management of the businesses. (Bromwich and Scapens,
2016).
Financial accounting system- It is a type of accounting system which contains financial
information and prepares the various financial statements for internal and external users.
Comparison of management and financial accounting system:
Basis Managerial system Financial accounting system
Legal
requirement
It is not compulsory to prepare. There
are no any legal requirement of this
accounting system.
While this is a legal requirement of
the firms. It is necessary to prepare by
the companies.
Format of
presentation
This accounting system does not
consists any particular format of
presentation of reports.
On the other hand, this accounting
system requires to follow a particular
format to present the financial

information.
Types of data
used
The management accounting system,
use both kind of data including
financial and non financial
information.
While financial accounting system
includes only financial data to prepare
various kind of statements.
Area of
coverage
within the
organisation
Management accounting system
focuses on internal part of the
businesses.
While this accounting system covers
both the are including external and
internal.
(b) Cost accounting system- It is a type of accounting system that is related to the estimating the
overall expenses that occurs in procedure of service or product offering. It consists different
kind of costs like direct cost, standard cost, process cost etc. This accounting system can be
beneficial for the Excite entertainment limited company for computing the overall cost in the
promotion of different kind of events. Some example of cost accounting system are mentioned
below:
Direct cost- These costs are kind of costs that can be directly traced to particular cost centre like
product, process, department etc.
Standard costing- Standard costing is a kind of costing system that involves analysis of variances
between actual and estimated costs. Due to this costing system companies can evaluate the level
of difference between actual and standard cost. Due to this costing system the Excite
entertainment company can aware about the difference of cost. Eventually, if actual cost occurs
low in compare to the estimated cost then it would be beneficial for the company.
(c) Inventory management system- It is a kind of accounting system which involves tracking of
inventory levels, sales, orders, deliveries etc. The Excite entertainment limited company may
apply this accounting system to manage their different media assets as well as due to this system
they can assess the need of purchasing new gadgets. The concept of inventory management
system can be understand by LIFO and FIFO methods. LIFO(last in first out) means the
inventory which comes in last that should be sold first. On the other hand, FIFO(first in first out)