Management Accounting: Principles, Role, and Systems

Management Accounting

Contents
Contents...........................................................................................................................................................2
INTRODUCTION..........................................................................................................................................3
MAIN BODY..................................................................................................................................................3
Part 1...............................................................................................................................................................3
Part 2.............................................................................................................................................................13
REFERENCES.............................................................................................................................................18

INTRODUCTION
Accounting is a process which mainly deals with all the financial transactions for which
there are some accounting approaches such as management accounting which focuses on each
and every sort of transactions. It has been said that management accounting refers to the
accounting approaches which is responsible for tracking all the financial as well as non-financial
records. It is said that MA is designed for all the managerial aspects so that they can take
corrective steps associated with monetary as well as non-monetary resource (Amir, Rehman and
Khan, 2020). In the present report, chosen organization is Innocent drinks limited where it is a
client of a business entity AJ and sons which provides consultancy services associated with
accounting. This is the report which is divided into two main sections where first includes
information linked with MA systems & reports. Whereas, in second part information related to
the contribution related to planning tools & MA systems are included.
MAIN BODY
Part 1
Principles of management accounting
Designing and Compiling- It ensures that the management accounting system is set up in such a
manner that the appropriate documentation is viewed (Agrawal, 2018). If this is the case, a
specific issue must be resolved. Furthermore, accounting data may be updated and implemented
to suit the needs of management.
Management by Exception- The real result is evaluated to a pre-determined one in order to
distinguish anomalies. The undesirable variations alone are assessed and managed as the source
of the issue. If this is the case, management has invested less time reading and studying the data
and more time acting on it.
Accounting for Inflation- A benefit cannot be deemed gained until the money is held in actual
terms. It indicates that the worth of money is not constant. As a result, revaluation accounting is
expected to determine the worth of capital contributed by the company concern's shareholders in
terms of actual value of money. In this way, the rate of inflation is taken into consideration when
determining the true performance of a company.

Role of management accounting
Management Accounting- It refers to an effective accounting which is mainly targeted in order to
gather as well as assess all the required information which has been occurred during the financial
year. It is the process which is conducted in order to develop internal accounting reports which
plays very essential role in the growth and success of a business entity.
Purpose of Management Accounting- It is said that the main purpose is to acts as one of
the most essential and effective element for the internal stakeholders which assist them in order
to take decisions in a well define manner (Balstad and Berg, 2020). This is the accounting
process which act as framework which enhance the overall performance of the business entity in
an effective manner. In addition to this, it has also been said that this is the process which acts as
a controlling mechanism for business entities which leads towards the improved performance of
the business entity.
Distinction between management accounting and financial accounting:
Base for
comparison
MA Financial accounting
Users This is the accounting process
which is designed for all the
internal stakeholders.
This method is used by internal as well as
external stakeholders both.
Regulations I order to prepare this sort of
accounting no rules as well as
regulations are going to be used.
This sort of the accounting system which
contains different type of regulations
needs to be considered by the accountant
while preparing the report.
Type of
company
It is the type of accounting which
can be implemented in any kind of
a business entity (Bhimani, 2020).
Whereas this the accounting system
which requires special organizations
which are usually listed in stock
exchange.
Types of Management Accounting systems: