Different Management Accounting Systems and Their Benefits

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1 Different management accounting systems and their benefits...............................................1
P2 Different methods used for MA reporting .............................................................................3
M1 & D1 Critical evaluation of MA system and reporting along with application....................4
P3 Application of different types of management accounting techniques..................................5
P4 Types of planning tools for exercising budgetary control......................................................9
P5 & M4 Comparing organisation adapting the MA systems for responding to financial
problems and leading organisation towards success. ................................................................10
D3 Evaluating planning tool for resolving financial issues for sustainable success. ................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
MA can be defined as accounting process including combination of the non financial and
financial statements to enable organisations for making effective decisions. The information
generated by the managers to take different activities and operations for controlling the costs.
Next Plc is international footwear, clothing and the home product retailer which is
headquartered at Enderby, Leicestershire. It has nearly nearly 700 stores and around 500 are
located in UK and 200 in Asia, Europe and Middle east. It is largest retailer of clothes by sales in
UK. Company is listed in London Stock exchange. Report will provide about the MA concepts
and systems used by managers. It will also include the MA reporting systems and different types
of costing techniques used. Further it will provide about the budgetary planning tools and use of
different tools in solving the financial problems.
MAIN BODY
P1 Different management accounting systems and their benefits.
MA refers to process involving presentation of the financial information regarding the
different operations of business to manage the internal working of organisation. It involves
application of professional & knowledge skills for formulating the accounting and financial
information that helps the management of company for planning, framing policies, strategies,
and to control operations of enterprise. MA enables management to take decisions that are most
beneficial for the entity.
Difference between management and financial accounting
MA is of internal use of company to take business decisions where financial accounting
aims at providing information to external users of the business such as stakeholders.
Organisation is not required to follow any set standard in MA reports while financial accounting
reports are prepared using set standards (Jermias, Gani and Juliana, 2018). MA reports are for
internal use therefore no audit where financial reports are required to be audited before they are
issued for public use.
Different MA systems and essential requirements
Cost Accounting systems
This refers to MA systems that keep record of all the transactions carried out by the
organisation related with production. The system helps company in tracing the costs related with
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each product being manufactured. It is essential for the business to evaluate costs to determine
the profit margins and costs of products.
Requirements
Cost accounting system is required for tracing the costs that are incurred at different
stages of manufacturing the product. The system enables managers in producing goods and
services at minimum cost and adequate profits.
Benefits
 Managers could identify productive and unproductive exercises of processes.
 Cost information provides the managers to make important strategic and operational
decisions. Cost accounting allows company to exercise control over increasing costs applying cost
efficient techniques.
Application
This system is applied by the manufacturing concerns to appropriately and effectively
record and implement the various costs in relation with the business production of goods and
services.
Inventory Management System
The system looks over each item of the stock. It plays essential role to assess needs
regarding the raw materials and other components used to produce the goods and
services(Abernethy and Wallis, 2019). This system provides a defined framework regarding the
management of inventory of the organisation.
Requirements
IMS is essential for the management to have record of each and every inventory items
from capital assets, raw material to other supplies of the company. It has automated the process
of ordering.
Benefits
 It assists in managing the inventory stocks of company adequately.
 Management could identify the frequency of inventory movement to make future
forecasting. It helps the company in saving and reducing its carrying cost of inventory.
Application
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