Management Accounting: Systems, Techniques, and Analysis Report

This report provides a comprehensive overview of management accounting, delving into various systems and techniques essential for effective business management. It begins by defining management accounting and differentiating it from financial accounting, emphasizing its role in internal decision-making. The report explores different types of management accounting systems, including cost accounting, standard costing, price optimization, job costing, and inventory management, highlighting their functions and benefits. It examines cost analysis methods used in formulating income statements and the advantages and disadvantages of different planning tools for budgetary control. The report further analyzes how organizations adapt management accounting systems to meet their specific needs and objectives, with a focus on Excite Entertainment Ltd as a case study. The report includes an analysis of the advantages and disadvantages of various management accounting systems, cost analysis techniques, and planning tools. It also covers the advantages and disadvantages of different planning tools used for budgetary control, and the factors organizations consider when adapting management accounting systems.

Management
Accounting

Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1 Management accounting and different types of system....................................................4
P2 Explain different methods of management accounting report..........................................7
M1. Evaluation of benefits of various management accounting systems..............................8
TASK 2............................................................................................................................................9
P3 Techniques to do the cost analysis for the formulation of income statement...................9
M2 Management accounting techniques and financial reporting documents......................10
TASK 3..........................................................................................................................................10
P4. Advantages and disadvantages of various planning tools used for budgetary control...10
M3 Analyse the use of different planning tools and their application for preparing budgets and
forecasts................................................................................................................................11
TASK 4..........................................................................................................................................12
P5. Organisations adapt management accounting systems..................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16
TASK 1............................................................................................................................................3
P1 Management accounting and different types of system....................................................3
P2 Explain different methods of management accounting report..........................................6
M1. Evaluation of benefits of various management accounting systems..............................7
TASK 2............................................................................................................................................8
P3 Techniques to do the cost analysis for the formulation of income statement...................8
M2 Management accounting techniques and financial reporting documents........................9
TASK 3............................................................................................................................................9
P4. Advantages and disadvantages of various planning tools used for budgetary control.....9
M3 Analyse the use of different planning tools and their application for preparing budgets and
forecasts................................................................................................................................10
TASK 4..........................................................................................................................................11
P5. Organisations adapt management accounting systems..................................................11
CONCLUSION..............................................................................................................................13

REFERENCES..............................................................................................................................15
Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1 Management accounting and different types of system.............................................................1
P2 Explain different methods of management accounting report....................................................4
M1. Evaluation of benefits of various management accounting systems........................................5
TASK 2 ...........................................................................................................................................6
P3 Suitable techniques of cost analysis to formulate income statement .........................................6
M2 Management accounting techniques and financial reporting documents..................................7
TASK 3 ..........................................................................................................................................8
P4. Advantages and disadvantages of different types of planning tools used for budgetary
control..............................................................................................................................................8
TASK 4..........................................................................................................................................11
P5. Organisations adapt management accounting systems............................................................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................17

INTRODUCTIONThe
accounting is referred as the recording, analysing and summarising of the data which can
evaluated in the present and which is wholly based on the past activities of the business. The
accounting thus can be considered as the most important term in managing the effectiveness in
the business as with the help of old recorded accounts and information the organisation
formulates its planning and futuristic operations of the company. Thus in managing a firm and
controlling, monitoring, recording the overall transaction in the management of the company is
termed as the management accounting. There are multiple kind of management accounting that
are devised as per the need of the organisation.. thus it can be ascertained that the management of
accounting certainly responsible for the planning, controlling, directing and recording of all the
financial as wells non financial transaction in the firm. In this project report the main elements
and types of different management accounting along with their reforms are discussed. The major
concept of relating the company with the certain type of accounting, the advantages and
disadvantages are also elaborated in the report. Further more the type of issues that a company
faces in the accounting and other procedure, their evaluation and proposing the right set of
solutions to overcome such problems are discussed .
Management accounting is also termed as a managerial accounting system. There are
different types of Management accounts and reports that are required by a manager in order to
make their day to take decisions best effective way and formulate short term and long term goals
(Adler, 2013). This form of accounting system is mainly useful to make decisions internally in a
business organisation that mainly includes financial and non financial form of information’s.
There mainly is no particular time to formulate and use which forms of managerial report
business organisations can utilise this as per their requirement. This accounting system is
somehow different from a financial accounting system as it aid in internal aspect of entity. In
order to effectively understand practices and concepts of Management Accounting Excite
Entertainment Ltd is being used in the report. This project covers formation relating to concept
of management accounting along with its benefits. In addition with their different forms of
managerial techniques reports covered in this report. Advantages and disadvantages are covered
in this report which describes the manner in which organisations can effectively resolve their
financial issue and stimulate their performance.
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TASK 1
P1 Management accounting and different types of system
Management Accounting:
The management accounting is itself a combination of two main factor and function. The
main terms in which they are devised can be ascertained as it is mainly a accounting system that
is an integral part in the business and its management which contains more operations and
activities other then the basic responsibilities of the accounting. The formulation and study of the
managerial report are also a part of the management accounting along with that it does it does
impacts on formulation of the certain planning and determining the right set of policies and
principles which can be used to attain the maximum number of profit for the firm. The
management accounting system are significantly holds dynamic kind of reforms in the company
that is used to evaluate and study of the elements in each and every department to make the
company more strong and enabling it to achieve the organisational objectives and goals in terms
of high revenue earning. The most effective system of the management accounting is defined
here by as follows :-
Management accounting is a formative accumulation of two words that are management and
accounting. It is an accounting system that is mainly related to business management internal
part. Management accounting is mainly aid in formulating managerial reports that are required
by an organisation in order to formulate plans and policies for the future purpose. Organisations
are not bound to maintain a accounting system as it is wholly depend on their actual requirement.
Moreover, accounting system hold its own importance within business organisation and some of
the major effectiveness are mentioned below:
Cost Accounting System: The cost accounting system majorly emphasis on the
monitoring and recording of all the transactions out flows that have been made out in respect to
complete the tasks and activities and all process to manufacture and delivering the product and
services to its consumers. Thus the cost of any product, procedure, task and operation is certainly
derived and planned with the help of cost accounting system. The cost accounting system is the
basic foundation in determining the cost and prising factor. Along with this it certainly plays a
major role in the business in evaluating the proper need of the finance for any activity. It helps
in creating, forecasting and comparing the estimate for any cost in curing task in the
organisation.
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This system of accounting is mainly a form of system which effectively aid in evaluating cost of
products within all the form of cost are included such as variable, fixed etc. It is essential for
organisations to have proper and appropriate estimation of their products and services cost as this
estimation of cost will effectively help them to check their overall ratio of profit and loss of a
products and services. Excite Entertainment Ltd take effective advantage of accounting system in
order to properly check their different types of cost of financial products and services. It will
directly help them to focus on their services and products section that hold more beneficiaries to
company.
Direct Cost: These types of cost can effectively be traced to a particular cost centre such
as, department, product, process etcThe direct cost is understood as all the direct expense that
has been made on the completion of any task and . the product directly. This cost is measurable
significantly before and after the expenditures.
Standard Costing: The standard cost system is the measurable outcome which is derived
from the comparison of actual cost that has been incurred in the execution of plan and the
estimated budget of the cost. It helps in evaluating the los and profit margin from the
organisational objective and helps in setting up of standards regarding the expenses by
understanding the actual differentiation .
It is a type of costing system which is mainly related to evaluation of variance in between
estimated and actual cost. This mode helps an organisation to effectively aware about cost
difference.
Price Optimisation System: This is the another form of management accounting system
in this system the major elements that effects the prising of any product or services are
considered. The discussion of pricing is thus supported by the accounting system particularly.
This accounting give a proper framework to decide the price and give all the rational to the
management in the confines of an organisation to determine the overall and maximum price for
any good or service.
This form of accounting system effectively provides a formative framework which helps to
determine price of a service and a product which is more suitable for organisation and
consumers. This will automatically aid in effective evaluation and review of consumer
perceptions at a different price range. The major purpose of price optimisation accounting system
is to effectively offer various factors that will help to set price. Excite Entertainment Ltd is
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taking effective advantage of this accounting system to set their price which is both beneficial for
customers as well as organisation.
Job Costing System: The job costing system defines all the step that will be incurred
while executing the task in the organisation to achieve the goals and objectives. Thus for an
instance to manufacture a product in the organisation there are various steps will be involved
from collecting the raw material to its marketing and distribution to the retailer. In the job
costing system all the elements that will be incurred to perform and execute each step in the
formation and production of the product will be evaluated and the job costing will be measured .
this accounting systems helps in estimating the overall cost that will be expensed in different
kind of jobs.
This accounting system includes formative calculation of total cost that occurs within the process
of providing services and product and distribution of cost to each and every individual unit
relating to products and services (Tucker and Lowe, 2014). Job costing method is mainly
effective in that form of organisations that provide different types of multiple services and
products. Excite Entertainment Ltd offer different types of financial products and services. Thus,
it is essential for entity to make proper estimation of each and every individual unit cost. Within
this situation, job costing system effectively aid in evaluating cost of numerous form of financial
services and products.
Inventory Management System: The inventory manage system is refer to the
monitoring, calculating, organising and planning of all the stock in the ware house that will be
essential in the trading of the organisation in decent amount. The inventory management also
helps in analysing the financial status of the respective product and services of the company in
the market it help in understanding the demand and need of the products and maintaining the
effective flow of supply. The inventory management is also responsible for the reporting the
important information regarding the lack of any product or over stocking (high availability) of
any product. The concept of cost thus can be analysed with the term FIFO and LIFO which
basically states the principles of first in first out and last in first out both are different form each
other in the manner of delivering and collecting the offerings of the company. In the context of
inventory management system The LIFO is termed as the last articles are needed to be sold in the
first place. Thus FIFO is known as the selling of those goods in the first series which came in the
first time. The other significant method in the inventory can be used as the weighted average
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method. In this method cost of goods that are available for sale are divided by total number of
units available.
It is one of the most important forms of accounting system which is mainly relating to tracking
products and services. This system will effectively aid organisations to check and evaluate their
availability of products and services. Inventory management system majorly works in the supply
chain management. Further it helps in analysing financial products and services status. For
instance, if an organisation is required to track their mortgage loan's clarification thus with the
help of inventory management system they can effectively check status of that service.
Formative concept of cost can effectively be understand with the help of FIFO( first in first out)
and LIFO( Last in first out). In this, LIFO states that inventory that comes last are required to be
sold first. While, FIFO termed inventory those who first come are sold first. Along with this,
weighted average method also proves to very effective in order to manage inventory. In this
method cost of goods that are available for sale are divided by total number of units available.
Financial accounting system- The financial accounting is the basics form of accounting where
the accounting is associated as the recording, segregating, analysing and summarising of all the
financial transactions and other events and elements of finance in the organisation. the financial
accounting is based on preparing and presenting the financial statements comprising of all the
financial details of the company for a particular time of the business. The financial statements
thus helps the business to understand the position of the firm and analyse all the flows , earning
and losses of the firm in the market. It does act as the effective measure top monitor and plan the
financial activities of the company in the present as well as for the futureThe financial
accounting system may be defined as a kind of accounting system which is related with the
preparation of the financial statements that provides the financial information to the
organisations (Edwards, 2013). Eventually, this accounting system is compulsory to implement
in all kind of the companies.
(B)Advantage of timely production of accounting information to both internal and external
stakeholders.
The accounting informations are very important for both to the internal and external
holders (Comyns, Figge, Hahn, Barkemeyer, 2013). Herein, the importance of accounting
information is mentioned below:
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For internal users- The accounting informations are beneficial for the internal users
because on the basis of it, they can make the important decisions. As well as it can help the
internal users like managers in effective management by making policies, plans and strategies on
the basis of relevant accounting information. Herein, the Excite entertainment limited company it
is beneficial for their managers to manage different activities by accounting information.
For external users- Same as the internal users, the accounting informations are useful
for the external parties such as shareholders, suppliers etc. This is why because due to the
accounting information they evaluate the financial condition of the company and make invest
accordingly.
Comparison in between management accounting and financial accounting system:
Basis Management accounting system Financial accounting system
Legal requirement It is not compulsory to prepare
management accounting system. In
this there are no legal requirement.
The management accounting is
prepared for increasing the efficiency
in the management it is the voluntary
function and hence it is not enforced
by the government to implement in
the company.
The financial accounting type
is mandatory for any kind of
business organisation by the
law. Thus in an organisation it
is necessary to practice the
financial accounting
legally.This
form of system include legal
requirement which is required
by an organisation to perform.
Format of presentation This system does not include any
specified type of format.This system
is not limited with one significant
format of presentation as there are
different type of formats which are
used in the management accounting
for the presentation
While, in financial accounting
system it is important to follow
appropriate formatIn the
financial accounting it is
essential to follow the right
and suitable format of
presentation..
Types of data used This form of accounting system This system of accounting
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include both type of data such as non-
financial and financialThe data is
used comes from both the sector i. e.
from financial as well as from non
financial elements.
cover data only in financial
formThe accounting is wholly
based on the financial type of
data..
Area of coverage of
within the organisation
This system of accounting include
organisation internal management
area.The management accounting has
covering of all the aspects within the
internal management of the
organisation.
Financial accounting system
include both internal and
external area.While the
financial accounting does
covers the internal as well as
external sections of the
organisation.
P2 Explain different methods of management accounting report
The management accounting report us a type of informative document which is prepared
with a view to share the relevant data and information. There are multiple methods of
management accounting system to present a report. The management accounting report are
comprised of various statement that help the manger in different department to formulate the
planning and respective working policies. There are different forms of accounting report which is
required by an organisation. Management Accounting play essential role within a company.
tThese types of accounting reports are important within an organisation in order to perform their
internal management business in best effective way. With the help of this report managers can
formulate their decisions and strategies. These types of report cover monetary and non-monetary
aspects of information. Excite Entertainment Ltd prepares certain types of reports encompassing
of essential and effective information from various aspects of the business. These reports are as
follows :-formulates different types of reports which are mentioned below:
Performance report: The performance report is the proper statement that holds the
details of performance and its measures in the organisation, in respect to management accounting
the performance report thus can be stated as the evaluation and assessment of the performance
and qualities of the work of employees and management in the company.
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Performance report effectively measure of performance. In relation with Management
Accounting performance report, it helps in evaluation of performance of an organisation and its
employees. It further helps in reducing complexity in decision with the help of the manager of
Excite Entertainment Ltd can easily able to decide eligible employees for reward. In addition
with their performance report helps company to maintain a regular check on performance of their
employees in order to increase their efficiency.
Budget report: The budget report is also a type of presentation in the management
accounting where this report is used to make a comparison form the planed and determined facts
from the actual expenses and performance standards of the organisation. The budget report states
the estimate for the organisational activities and their execution for the said period of the time. It
is particularly based on the internal factors of the company. The budgets that are presented in the
budget report are considered as the end limit of expensing the unit of monetary elemnt in the
completion of the project in the organisation
This report is an internal Organisation in report which helps management to compare
their performances with actual performance along with this it also helps in formulating policies
and strategies both for present and future purpose. It effectively makes estimations of expenses
income which is related to a particular period of time with the help of the support organisations
can effectively compare their performances and fulfil their actual objectives. Excite
Entertainment Ltd by using battery powered can make proper and appropriate comparison. In
between their actual finance performance with budgeted goals. It further benefits them to make
appropriate and best effective Strategies for future purpose and increase their performances by
maintaining an appropriate and cost-effective budget.
Account receivable aging report: This form of report contains information related to
credit transactions. Account aging report is suitable for those organisations those who perform
their day-to-day transactions. It mainly included benefit for Finance Department to effectively
analyse the amount of money in a market by customers. Along with this report also cover date of
a transaction made that automatically helps in removing the complexities in credit calculation.
Excite Entertainment Ltd appropriately prepare account receivable aging reports which help
them to take their total collections from sellers in customers in bringing transparency within
credit collection from a Marketplace.
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