Comprehensive Report on Management Accounting for Al Sham Automotive

This report examines management accounting principles and their application within Al Sham Automotive, a small business in the car industry. It differentiates between financial and managerial accounting, highlighting the significance of management accounting tools for cost control and performance enhancement. The report delves into key aspects of management accounting, including its role in decision-making, planning, and control, and explores different accounting systems such as cost accounting, lean accounting, and inventory accounting. It also assesses the role of management accounting methods for reporting, providing examples like job costing and operating budget reports. Furthermore, the report explains the integration of management accounting within an organization, emphasizing the importance of systems like standard costing. The conclusion emphasizes the importance of management accounting for Al Sham Automotive to improve efficiency and strategic planning.

Accounting
TASK 1

 In the present era, business nit places high level of emphasis on
undertaking managerial accounting tools and techniques. The
rationale behind this, management accounting tools provides input
for the cost control and thereby helps in enhancing business
performance in monetary terms.
 The present report is based on Al Sham Automotive Co which is
operating in the small business segment of car industry. In this, report
will highlight the extent to which financial accounting varies from
managerial.
 Besides this, it will provide deeper insight about the aspects of
management accounting and reporting. Further, report also depicts
the roles and responsibilities shared by accounting as well as
financial manager within the firm.
INTRODUCTION

 Management accounting and reports provide managers
with appropriate and timely financial as well as statistical
information. Hence, managerial reports assist in making
day to day and short term decision that contributes in the
growth of firm.
 Managerial accounting may be served as a process of
analyzing, interpreting and presenting information in front
of higher management team for decision making.
 By considering all such aspects Al Sham Automotive Co
lays emphasis on undertaking the tools and techniques of
management accounting.
1. Identifying the principles of management
accounting

Principles of management accounting
 Influence
 Relevance
 Value
 Trust
 Integration
CONTD….

Basis of difference Managerial accounting Financial accounting
Meaning It offers input to the managers for
the formulation of policies, plan
and strategies. Hence, such system
is highly significant which in turn
ensures the smooth functioning of
business operations.
This accounting system lays
emphasis on the preparation of
financial statements. The main
motive behind such accounting is to
provide all the related parties with
appropriate financial information.
Compulsion No Yes
Information Such accounting system serves both
financial and non-financial
information for decision making.
Field of financial accounting only
offers financial information to the
stakeholders for decision making.
Difference between managerial and financial accounting are enumerated
below:

Format no specific format highly structured and
appropriate format is needed
Reporting complete and detailed
information
summarized information
regarding the financial position
and performance of firm.
Publishing and auditing
requirements
There is no need of publishing
and auditing under managerial
accounting.
Financial reports must be
published after auditing by a
statutory auditor.
CONTD….

 With the motive to attain success over competitors Al
Sham Automotive is planning to undertake MA tools
and techniques.
 The main reason behind this, system of MA furnishes
appropriate information to the managers for planning,
controlling and managing the operations of business.
2. Presenting the most common accounting systems used by
organizations

Thus, MA facilitates optimum utilization of resources
by eliminating the waste to a great extent. Hence, MA
system that can be undertaken by Al Sham
Automotives are depicted below:
 Cost accounting
 Lean accounting
 Inventory accounting
CONTD….

AL sham Automotive also needs to employ management
accounting techniques as it has high level of significance in
the following way:
 Helps in the preparation of plan:
 Assists in make or buy decision:
 Provides assistance in forecasting cash flow:
 Understanding performance variances:
 Analyzing rate of return:
3. Assessing the role of management accounting and methods
that can be used for the purpose of reporting

Managerial reports: By preparing the below mentioned
reports manager of Al Sham Automotive can develop
competent plan for the upcoming time period such as:
 Job costing report
 Accounts receivable aging
 Operating budget report

From assessment, it has been identified that management
accounting system is highly integrated within the organization.
Moreover, it focuses on each & every department and thereby
helps in developing plan which in turn may result into
organizational success. Standard costing system is one of the
main examples of MA that facilitates effectual judgement such
as:
 Standard costing
 Balance scorecard
4. Explaining the manner in which management accounting is
integrated within an organization

 By summing up this report, it has been articulated that principle of management
accounting are highly prominent which in turn helps in preparing suitable reports.
 Besides this, it can be inferred that by employing MA tools and techniques Al
Sham Automotive can make forecast of cash flows, cost, profit etc.
 It can be seen in the report that effectual long term strategic plan is highly based
on budget, job costing and operating budget reports. Hence, by making assessment
of all such reports Al Sham Automotive can take decision for the near future.
 Further, it can be summarized that accounting manager carries out several
responsibilities and assist higher manager in decision making. It can be stated from
overall evaluation that MA methods are highly integrated within the firm and
facilitates the formulation of competent plan.
 Hence, MA system is highly significant for Al Sham Automotive which helps in
enhancing efficiency, performance and process to a great extent.
CONCLUSION

Chenhall, R. H. and Moers, F., 2015. The role of innovation in the
evolution of management accounting and its integration into
management control. Accounting, Organizations and Society. 47. pp.1-
13.
Demski, J., 2013. Managerial uses of accounting information. Springer
Science & Business Media.
Fullerton, R. R., Kennedy, F. A. and Widener, S. K., 2013. Management
accounting and control practices in a lean manufacturing
environment. Accounting, Organizations and Society. 38(1). pp.50-71.
Fullerton, R. R., Kennedy, F. A. and Widener, S. K., 2014. Lean
manufacturing and firm performance: The incremental contribution of
lean management accounting practices. Journal of Operations
Management. 32(7). pp.414-428.
REFERENCES