Management Accounting Systems and Reporting

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1
P1. Types of MA systems and essential need. ............................................................................1
P2. MA reporting. .......................................................................................................................3
TASK 2............................................................................................................................................4
P3. Accounting techniques to prepare financial reports..............................................................4
TASK 3............................................................................................................................................8
P4. Different planning tools.........................................................................................................8
TASK 4............................................................................................................................................9
P5 Comparison in which MAS to solve financial issues. ...........................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Concept of management accounting is seen as an accounting which is responsible to track
and record financial and non-financial information (Vultur, 2018). This information is used to
produce internal reports at the time whenever managers need. Management accounting is
specially designed for managerial aspects in order to take corrective steps related to monetary
and non-monetary resource utilization. In this report, a company is chosen named as Innocent
Furnitures Limited which is a manufacturing business of tables and chairs. This company is a
client of AJ and Sons that offer consultancy services related to accounting.
The report is categorized into three parts under that first one covers information related to
MA systems and reports. While second part contain some financial techniques addition to their
practical implication on given data set. At last, contribution of planning tools and MA systems
have been discussed in order to deal with financial concerns of companies.
TASK 1
P1. Types of MA systems and essential need.
MA- It is defined as an accounting that is targeted towards gathering and assessing key
information from transactions occurred in a business during a financial year (Ibarrondo-Dávila,
López-Alonso and Rubio-Gámez, 2015). This act is performed to produce internal accounting
reports which are directed by managers to take important decisions within Innocent Furnitures
Limited.
Distinction between MA and financial accounting:
Base for
comparison
MA Financial accounting
Users This accounting is mainly designed
for internal stakeholders.
It is used by both internal and external
stakeholders.
Regulations There are no rules and regulations
under this accounting to prepare
internal reports.
This accounting contains several
regulations which need to be considered
by accountants.
Type of
company
It can be applied in any form of
business. This accounting does not
require any listed company.
While this accounting is a mandatory for
those companies which are listed in a
reputed stock exchange.
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Types of MA systems:
This accounting has a link with each and every segment of business. Due to which
managers of the company uses diverse categories of accounting systems which are
discussed underneath:
 Cost accounting system- This accounting system is formed with a process of tracking
and controlling all those expenses which occur in a business during an accounting cycle.
Under it, each items’ cost is recorded and compared with standardized cost (Halldén,
Säve-Söderbergh and Rosén, 2018). In relation to Innocent Furnitures Limited, finance
managers can obtain key information from this accounting system about cost of different
activities along with variance. This may lead to take a suitable step in terms of need of
fund or eliminating those activities which are higher cost consuming. In the Innocent
Furnitures Limited, this accounting system is essential to apply for eliminating cost of
unnecessary activities. As well as it leads in preparing effective strategies for correct
activities which are resulting in more expense.
 Inventory management system- It is known as an accounting system which is linked
with managing all forms of stock of firm. This is done by recording stock report on
regular base that include information about consumption of raw material, prepared stock
etc. As well as this accounting system enables firms to use inventories for production in
sequence that is done by help of different approaches named as FIFO, LIFO etc. In
Innocent Furnitures Limited, it is essential for managing raw material like fruits, sugar
for production as well as making new output in accordance of stored number of prepared
furniture.
 Job costing system- This is an accounting system which emphasis on tracking cost of job
or task aligned in procedure of completing an operation. The aim of this accounting is to
measure of cost of each particular unit so that further decision can be carried out. In the
context of above Innocent Furnitures Limited, this accounting system can be introduced
with an objective of finding cost of job or task for each activity along with per unit cost.
This accounting is necessary to identify number of job allocated in finishing an activity as
well as to measure cost of each unit (Ramachandran Rackliffe and Ragland, 2016). The
managers of Innocent Furnitures Limited can apply this accounting system because they
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