The Role of Management Accounting Information in Tourism Businesses

This report explores the types and uses of management accounting information within tourism businesses, emphasizing its crucial role in decision-making. It identifies key types of management accounting information, including financial statements, budgets, forecasts, variance analysis, and management information systems (MIS). The report discusses how this information aids in comparing market trends, forecasting future performance, and making informed decisions about raising capital. Using management accounting information enhances clarity in budgetary forecasting, improves productivity, and supports strategic financial planning for tourism organizations. References to relevant research underscore the importance of these practices in contemporary business management.

FINANCE AND
FUNDING
TASK 2

2.1 Types of management accounting information
that can be used in tourism businesses
 Management accounting information are day to day information which
are required by managers. These reports are for internal purpose only.
 This information is available to be used by the managers only and no
third party involvement is observed.
 The management accounting information is available in quantified in
monetary forms.
 Management accounting information is of different types depending on
size and nature of the firm.
 It also helps in planning of business ahead in an effective way which is
much needed for managers to take a sound decision for the betterment of
organisation. The different types of management accounting are:

Financial statements
 Financial statements are those statements which reflect the
organisation’s operations in quantifiable form.
 It is the financial record of organisation. It has a structured format
which is required to make the information worthwhile to access by the
management team.
 It is further divided in two parts i.e. balance sheet and income statement.
The balance sheet reflects the organisation's assets and liabilities to a
particular date usually at the end of financial year.
 It also has cash flow statement which shows cash generating from
operating, investing and financing activities.

Budgets
 Budgets are the financial plans which make an order so that no
resources leads to wastage.
 They are of short term and can be altered as organiation functions
in dynamic environment.
 Budgets help managers to have an estimate of required activities
to be undertaken to accomplish the tasks of organisation.
 These are required to meet the strategies and goals as well as aim
of organisation in the best possible way which will enhance its
productivity.

Forecasts
 Financial forecast is an estimate for future financial outcomes of
company.
 Firm like Merlin effectively forecasts its financial outcomes so
that it can meet its goals and objectives in an effectual manner.
 Forecast is done by using historical data and previous actual costs.
It also considers the external factors.

Variance analysis
 Variance analysis is often used when organisation has to compare budgeted
results with the actual results.
 It is measured in this aspect so that any deviation which arises out of the gap
between actual and budgeted can be corrected by taking and implementing
corrective actions in the organisation for further investigation.

Management information system (MIS)
 The information is useful for business process to maintain customer’s
database and to collect as well as store data for different business
operations by company.
 Merlin entertainment company also stores and collects data for
business process. Example, holding customer and product’s
information.
 This information is used by every enterprise whether small or large. It
is useful for them in assessing information.

2.2 Discuss use of management accounting
information for a decision-making in organisation
 The management accounting information aids to decision making as it
compiles the use of all financial statements like balance sheet, income
statement and cash flow statements which are used for effective
decision-making by organisation.
 Merlin entertainment company basically relies on management
accounting information to have complete clarity in budgetary forecasting
which will enhance firm's productivity and gain more revenue in tourism
sector.

Comparing with trends
 Management accounting information aids to compare the present
and future trends in market.
 Everything is connected to the cloud platform in today's era.
Earlier, organisations were relying on more of the accounting in
paperwork which has its disadvantages.
 It was a bit costly to handle an additional cost. But now, cloud
platform is helpful to store information on cloud basis which
reduces costs of management and increases productivity.
 Comparing trends can be easily done on this platform.
Management accounting information makes the way for company
so that they can make decisions on the behalf of it.

Forecasting
 Another tool which aids in decision-making using management accounting
information is forecasting.
 Forecasting is a helpful tool to make an estimate according to facts and
figures provided in the past historical sales data.
 This data is taken as reference to make an estimate or forecast for the
future of firm.
 It helps the organisation to make a forecast estimate so that it can make
strategies accordingly. This will help organisation to be efficient in its
work and will gain more revenue from the market.

Cont....
 This will be helpful to firm in making future forecasts on the basis of
past figures.
 The information in forecast can be changed by company. It is altered
in organised way.
 Moreover, it will make firm more vibrant in its operations as it
changes according to the market situations.

Raising fund
 The capital to raise or not also provides way to management team. Using
management accounting information makes it easy to have the
information on it. Capital is the basic requirement of all firms.
 Company uses this information to have a eye whether to raise capital for
functioning of it activities or not.
 This is done by having analysis of management accounting information
which exhibits the information about firm’s profit or loss. It reflects
whether the expenses are more or gains are more.
 It aids in decision making tool which provides efficiency to the
organisation.