Management Accounting: Definition, Systems, and Applications

This report provides a comprehensive overview of management accounting, beginning with its definition as per the Institute of Management Accountants. It outlines various types of management accounting systems, including cost accounting and inventory management systems. The report further explores methods used for management accounting reporting, such as job cost reports and inventory management reports, and highlights the benefits of implementing such systems, including improved decision-making and increased cash inflows. Additionally, the report discusses the applications of management accounting within different departments of an organization, such as production and sales, emphasizing its role in enhancing productivity and efficiency. The report also touches upon the integration of management accounting systems, emphasizing their importance in generating performance reports and improving the quality of products and services, ultimately leading to customer satisfaction. References are included at the end of the report.

Management Accounting

2
Definition of management accounting
● As per Institute of Management Accountants, it can be defined
as ''it is a profession of identifying, planning and evaluating
management systems and providing expertise in formulation
and implementation of organisational strategy''.

3
Types of management accounting systems
● Cost accounting system
● Inventory management system

4
Contd...
● Price- optimizing system
● Job costing system

5
Methods used for management accounting
reporting
● Job cost reports
● Performance reports

6
Contd...
● Inventory management reports
● Operating budget reports
● Account receivable aging reports

7
Benefits of management accounting system
● Better decision making
● Increased cash inflows

8
Contd...
● Low expenditure
● Enhances returns

9
Applications of management accounting
systems
● Management accounting system is useful in many areas
within an organisation. It can be used in production
department. Production department compares their actual
output with budgeted output and can keep a record of goods
produced with the help of management accounting system.
● Management accounting system helps in increasing overall
productivity and efficiency.

10
Contd...
● It is also helpful for inventory management department. This
department is able to keep a record of the opening stock, closing
stock etc. It maintains the minimum amount of inventory to be
maintained.

11
Contd...
● Management accounting system acts as a tool for sales
department too. It ensures managers to keep a track record
of the sales in a particular period.
● It also enables managers to keep a check on the sudden rise
in demand of products in the market.

12
Evaluating the integration of MAS and
management accounting
● Management accounting and management accounting
system both are important for an organisation.
● Management accounting system is frequently used by the
managers which helps in generating reports to measure the
performance based on the management accounting reports.