Management Accounting: Systems, Principles, Role & Benefits

This presentation provides a comprehensive overview of management accounting systems, highlighting their role, principles, and benefits within organizations. It defines management accounting as a crucial branch of financial management that involves analyzing financial data to evaluate performance and advise companies. The presentation covers various management accounting systems like price optimizing, inventory management, cost accounting, and job costing systems. It elaborates on methods like variance analysis reports, cost schedules, budgets, and accounts receivable ageing reports. Key principles such as influence, relevance, value, and trust are discussed, emphasizing their importance in effective management accounting. The presentation also addresses the integration of management accounting through big data analytics, accounting information systems, and database management systems, showcasing its impact on capital budgeting, cost-volume-profit analysis, and financial performance evaluation. The presentation concludes by highlighting the benefits of management accounting functions, including optimal capital structure decisions, improved planning, and enhanced control through techniques like variance analysis.

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Management Accounting

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Slide 1: Introduction
This presentation is designed for facilitating knowledge about management accounting
systems.
The focus of this presentation is also on application of the management accounting
techniques used in different organizations.
This presentation also covers the understanding about principles of management accounting.
Moreover, it provides role and importance of management accounting systems and
management accounting. In addition to this, the presentation emphasizes on usage of different
management accounting techniques for key calculations required for income statement.
It is also helpful in understanding the integration of management accounting in a business
organization. Finally, the presentation is helpful in understanding benefits of different
functions of the organization.
Slide 2: Management Accounting
Management Accounting:
Management accounting can be defined as the branch of accounting and financial
management that deals in study and evaluation of financial data of company in order to
evaluate financial performance of company and also to provide appropriate advice to
company(Blackwood, 2014).Management Accounting deals in identification, analysis,
interpretation and presentation of key accounting information in different organizations.
Management accounting is highly helpful to the managers in companies while taking major
business decisions for the company and while designing organizational policies.
Different Types of Management Accounting Systems:
Example of different management accounting systems involves price optimizing system,
inventory management systems, cost accounting systems and the job costing systems.
One of the applications of management accounting system is measurement of performance.
The performance of employees is done through comparison of actual performance against the
standard performance(Blackwood, 2014).
Management Accounting system is also helpful to the managers in allocation of resources in
different business activities.
Slide 3: Methods of Management Accounting Reporting
Variance Analysis Reports:
Under this method, the variances are calculated and reported by comparison of actual
performance of company against standard or budgeted performance benchmarks. Example of

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different elements, which are taken into account for study are revenue, selling price per unit,
direct labour overheads, direct material overheads, fixed overheads etc(Maheret al., 2012).
Variance analysis reports are highly beneficial to evaluate performance of a company.
Cost Schedules:
Cost schedule is also a major document that is helpful to understand cost schedules associated
with different business expenses in company.
Budgets:
Budgets are also major type of management accounting reports in different organizations.
Different types of budget reports are visible in organizations such as sales budget, marketing
budget, production budget etc(Maher et al., 2012).
Accounts Receivable Ageing Report:
These reports are mainly produced in business for the effective management of receivables in
a company.
Slide 4: Calculation of Costs to Prepare an Income Statement
Slide 5: Income Statement Under Absorption Costing

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Slide 6: Principles of management Accounting
Following are four major principles of the management accounting that should be followed
by every organization:
Influence:
According to principle of influence, communication plays a very vital role in presenting the
insight that is highly important in business. Communication is required from starting to end
phase of the management accounting (Cairney et al., 2011). It also empowers the decision-
making procedure of managers through better insights about key accounting details.
Relevance:
According to this principle, all the required and relevant information is presented before
different stakeholders of the company at the time of need. At the same time, all the
information provided by management accountants should be relevant and pertinent for
decision makers.
Value:
According to this principle, the management accounting evaluates impact of different
strategies and strategic decisions of the company on value(Jones, 2015). Scenario analysis is
also taken into account for better decision making.
Trust:
Trust principle states that Stewardship builds the trust. According to this principle the
decision-making process in organizations can be made more objective through components of
scrutiny and accountability. Trust and credibility can be enhanced through balancing of
stakeholder’s long-term value and the short-term commercial interests.
Slide 7: Role of Management Accounting and Management Accounting Systems
Management accounting and management accounting systems perform the role of
stewardship. It helps in developing the framework for cost and financial accounts.

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Management accounting system is also helpful in operational and routine financial decision
making.
Management accounting system also helps in the short term and long-term planning within an
organization. There is also vital role of management accounting in prediction of future
economic events or business events.
Management accounting is also highly beneficial in designing optimal capital structure for
the company. Optimal capital structure is that capital structure, which comprised of lowest
financial cost for company.
Management accounting is also helpful in control mechanism due to availability of variance
analysis technique in the hands of management accountants.
Slide 8: Integration of Management Accounting in an Organization
Integration of management accounting in seen in different organization in the form of
development and usage of big data analytics management system. In addition to this, the
management accounting is also integrated with the accounting information systems and
database management systems within an organization. The integrated database management
approach is adopted by organization for high operational efficiency and better decision
making at the time of need.
Slide 9: Benefits of Management Accounting Functions to Organizations
The benefits of management accounting function are visible in organizations in the form of
capital budgeting decisions, adoption of optimal capital structure etc. Management
accounting is also helpful in effective planning of different factors like cost volume and profit
in organizations. One of the most important benefit of this function in evaluation of financial
performance of company and taking better actions accordingly(Smith, 2017). Management
accounting focuses on adoption of scientific forecasting of budgets that ultimately contributes
in increasing production or output within the organization.
Slide 10: Conclusion
On the basis of above presentation, it can be summarized that there are different types of
management accounting systems such as price optimizing system, inventory management
systems, cost accounting systems and the job costing systems.
There are different principles of management accounting such as relevance, value, trust and
the influence.
Example of different roles and benefits of management accounting involves optimal capital
structure decisions, cost-volume profit analysis, scientific budget forecasting, evaluation of
financial performance and better control through variance analysis technique.
Slide 11: References

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Blackwood, N. (2014)Advanced Excel Reporting for Management Accountants. USA: John
Wiley & Sons.
Cairney, C.T.,Chivaka, R. and Fourie, H. (2011)Principles of Management Accounting: A
South African Perspective. UK: Oxford University Press.
Jones, S. (2015)The Routledge Companion to Financial Accounting Theory. UK: Routledge.
Maher, M.W., Stickney, C.P. and Weil, R.L. (2012)Managerial Accounting: An Introduction
to Concepts, Methods and Uses. USA: Cengage Learning.
Smith, S.S. (2017)Strategic Management Accounting: Delivering Value in a Changing
Business Environment Through Integrated Reporting. USA: Business Expert Press.