Management Accounting Report: Performance and Financial Analysis

This report provides a detailed overview of management accounting and its significance for Small White Elephant (SWE). It explores the essential requirements of management accounting, including principles like designing and compiling data, controlling accounting sources, integration of information, and resource utilization. The report highlights management accounting's role as a marketing tool, aiding managers in making effective decisions. It differentiates between management and financial accounting, outlining their key differences in terms of definition, information provided, and time frame. Furthermore, the report delves into various management accounting methods, such as cost accounting systems, inventory management systems, job cost reports, inventory management reports, accounts receivable aging reports, and performance management reports, demonstrating their impact on business operations and decision-making. The conclusion emphasizes the importance of management accounting in controlling business aspects, enhancing profitability, and improving employee performance.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and essential requirements........................................................1
P2 Management accounting methods.....................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Management accounting reports are necessary for the firm in order to evaluate their
overall performance in different categories of the business such as operational. The report will
cover the management accounting structure and the essential requirements and usefulness as a
marketing tool for the business. Management accounting reports regarding different business
activities such as inventory, cost and product management will be discussed in this assignment.
Moreover, the major difference between management accounting and financial accounting will
be covered.
TASK 1
P1 Management accounting and essential requirements
Management accounting is important for Small White Elephant (SWE) in order to
make financial reports within the firm which will help to make decisions regarding financial
activities. It helps to evaluate the cost of operational activities and prepare financial information.
This will help business to have better planning and controlling over operational and firm
activities and lead towards achieving desired goals and objectives.
MANAGEMENT ACCOUNTING PRINCIPLES
 Designing and compiling: Designing and compiling refers to making reports, accounting
information, statements and other evidences of past and future data should be well
designed and compiled by the firm in order to meet the business objectives and goals
effectively (Archives, 2018). Management accounting will help to design this data and
present relevant information.
 Control over source accounting: The best control over the business resources and costs
includes the performance of employees, information regarding raw materials and
utilisation of different resources within the firm such as maintenance, repairing,
machineries and vehicles etc. this will be done in the form of qualitative and quantitative
approach or information effectively.
 Integration: Integration refers to the collection of all useful information and data
regarding the management is integrated which will help to be used at maximum and at
the same time as well. It can be said that accounting services are provided at a lower cost.
 Resources utilisation: SWE should ensure that the available resources in the firm should
be used effectively towards the operational activities. Management accounting will help
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to evaluate the availability of resources in business and will also help to keep them in the
form of proper utilisation effectively.
MANAGEMENT ACCOUNTING AS A MARKETING TOOL
Management accounting information and data help managers in SEW in order to make
effective decisions towards effective use of available resources in the firm (Charifzadeh and
Taschner, 2017). For an example, information and data utilisation, cost techniques based on the
activities and cost analysis etc. This will help managers in the firm by determining the
performance metrics and also collect information to report the present performance of firm as
compared to the expectations effectively.
DIFFERENCE BETWEEN FINANCIAL AND MANAGEMENT ACCOUNTING
BASIS MANAGEMENT ACCOUNTING FINANCIAL ACCOUNTING
DEFINITION Information and data provided by
management accounting methods will
help managers to make strategies and
plans to improve business operational
activities.
Financial accounting prepares
financial statements and information
which will help business to improve
their financial operations (Solovida
and Latan, 2017).
INFORMATION Monetary and Non-monetary
information.
Only monetary information.
TIME FRAME Reports are made according to the
requirement and demand in the firm.
Financial statements made by the
firm at the accounting time period
which is at the end of the year.
Cost accounting system: The cost accounting system will help managers in the firm to
determine the cost of products and services effectively. In addition, the system involves normal,
actual and standard costing (Coad, Jack and Kholeif, 2016). The cost of operations can be
controlled by managing the cost accounting system. This will be done by making strategies and
plans with the help of information provided by method. It will increase the profitability and
production for the firm.
 This will help managers by providing them the actual selling price of products and
services.
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 Managers are also able to evaluate profitability in order to meet the competition.
 Inventory management system: Inventory such as stock, raw materials, resources and
products which will in terms of finished goods and work in progress. Management of
inventories will help business and manager to control the use of available resources in
order to increase the efficiency in production process. This will also help to evaluate the
quantity of stock within the firm to manage the resources.
P2 Management accounting methods
Management accounting reports will help organisation and manager to control and
manage different operational and business activities which will be internal or external
effectively.
 Job cost reports: This will help managers to evaluate the cost of work in order to
determine the work done by employees within the firm effectively. The job casting
reports also analyse the cost of products and services while it is in progress as well
(Green, 2017). These job casting reports analyse the cost of products and aid other
expenses in order to make their separate profitability towards customers in the market.
This will help management to decide the final price of products and services to be offered
by them in the market.
 Inventory management reports: Management of inventory will help managers to
control business resources at different inventory levels. Inventory such as stock, raw
materials, resources and products which will in terms of finished goods and work in
progress. Moreover, management of inventories will help business and manager to
control the use of available resources in order to increase the efficiency in production
process. This will also help to evaluate the quantity of stock within the firm to manage
the resources.
 Accounts receivable ageing reports: The reports are also known as a critical tool for the
firm which breaks down the consumer balance at the time when he is involved in the firm
effectively (Herasymovych, 2017). These reports also provide cash flow information
which helps to manage the cash flow in business. Managers are able to look at their past
debts.
 Performance management reports: This will help to identify the performance level of
employees within the business which will produce a report in form of overall
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performance regarding business activities and work. Managers are able to find employees
with lower skills and knowledge to improve and develop them effectively. This will help
Small White Elephant business to achieve their desired goals and objectives which lead
towards the profitability and production efficiently.
Management accounting is important for the firm in order to provide useful and
important information and data to the managers regarding business operational activities
(Kasravi, Ghasemi and Zadeh, 2017). The reports will help by providing information regarding
business resources, products and services costs, and also performance analysis in order to make
effective decisions. Reports will also help to make effective strategies and plans in order to
improve and develop the performance of employees. This will lead towards achieving the
individual and organisation desired goals.
Thus. It can be said from the above analysis that management accounting reports will
help managers in Small White Elephant to control and manage various business activities
(Salterio, 2015). This will provide effectiveness towards operational activities which lead
towards increasing profits and productivity for the firm effectively and efficiently.
CONCLUSION
It can be concluded from the above report that management accounting requirements and
effectiveness as a marketing tool for Small White Elephant business will help managers to
control different aspects of the business such as operational in order to enhance the profitability
and production. The reports will also help to analyse the performance of employees in various
departments of the firm in order to improve and develop. This will also help them to manage
their financial activities and operations in order to solve the business financial issues and
problems. Thus, it can be said that management accounting and reports will help business to
accomplish their desired goals and objectives.
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REFERENCES
Books and Journals:
Archives, T., 2018. ACCOUNTING PRACTICES IN GERMANY. Management
Accounting 677359(169428).
Charifzadeh, M. and Taschner, A., 2017. Management accounting and control: tools and
concepts in a Central European context. John Wiley & Sons.
Coad, A., Jack, L. and Kholeif, A., 2016. Strong structuration theory in accounting
research. Accounting, Auditing & Accountability Journal 29(7) pp.1138-1144.
Green, M., 2017. 5. Research methods in organization, management and management
accounting: an evaluation of quantitative and qualitative approaches. Handbook of
Research Methods in Corporate Social Responsibility, p.76.
Herasymovych, I., 2017. Mechanisms and Tools of Accounting and Financial Engineering in
Enterprise Management. Accounting and Finance (1) pp.25-32.
Kasravi, A., Ghasemi, M. and Zadeh, N.N., 2017. The Effect of Management Accounting,
Financial Performance and Organizational Performance in Tafresh University. Journal of
Internet Banking and Commerce 22(3) pp.1-10.
Salterio, S.E., 2015. Barriers to knowledge creation in management accounting research. Journal
of Management Accounting Research 27(1) pp.151-170.
Solovida, G.T. and Latan, H., 2017. Linking environmental strategy to environmental
performance: Mediation role of environmental management accounting. Sustainability
Accounting, Management and Policy Journal 8(5) pp.595-619.
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