Management Accounting: Essential Requirements and Methods

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
Explain management accounting and give the essential requirements of different types of
management accounting systems.................................................................................................1
Explain different methods used for management accounting reporting......................................3
LO2..................................................................................................................................................4
Calculate costs using appropriate techniques of cost analysis to prepare an income statement
using marginal and absorption costs............................................................................................4
LO3..................................................................................................................................................9
Explain the advantages and disadvantages of different types of planning tools used for
budgetary control.........................................................................................................................9
LO4 ...............................................................................................................................................13
Compare how organisations are adapting management accounting systems to respond to
financial problems......................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCE ................................................................................................................................16

INTRODUCTION
Management accounting is the continuous process of decision making in relation to
organization by analysing, identifying, measuring and interpreting the financial information. For
organization it is important to analyse the financial situation and use effective system of
accounting which can help to resolve the problems which are facing by organization and
supports to develop the business (Azudin and Mansor, 2018). This report is based on Prime
Furniture that is a growing East London based company that manufacture different design and
structure of furniture for customers. The management of organization plays an important role as
they analysis the activities and formulate strategic planning which helps to operate the business
effectively. The report covers management accounting and its essential requirement, methods
uses for management accounting, reports of accounting, and planning tools that supports to run a
business.
LO1
Explain management accounting and give the essential requirements of different types of
management accounting systems.
Management accounting and its definition: A process of preparing reports by analysing
the financial position of company is defined as management accounting. This can help to operate
the business by informing management to make right operational decision by developing the
activities.
According to Quattrone (2016), management accounting is a branch of accounting which
is concerned with identification, measurement, and interpretation of accounting information so
that management can make necessary decisions.
Origin, role and principles: Management accounting is origin by accounting institution
for the purpose of managing all accounting information. It origin during 1900's by focusing on
accounting standards. The role of management accounting is very important for any organization
as collection of financial information, recording, and reporting to managements so that right
decision can be made. The principle of management accounting are Influence, Relevance, Value,
and Trust that can help to operate a business effectively (Bromwich and Scapens, 2016).
Difference between management and financial accounting
Basis Management accounting Financial accounting
1