Modern business environments are increasingly competitive and dynamic. Global competitors in advertising, public relations, e-commerce and demand-based supply chain management dominate business. Jessup need to secure their market position and enhance their market share. It is more important to develop coherent and consistent business strategies and to utilize management accounting tools to support strategic cost control, prices strategic, trends, planning and control etc.
Just like other small to medium size firms, Jessup is adopting a traditional financial accounting system currently. This system provides semi-annually and annually financial reports for management review their business financial situation. These reports focus on the whole business and concerned with the provision of historical information to external parties such as creditors, stockholders and regulators, who are interested in and have a financial investment or stake in a company.
Management accounting on the other hand is more like a management tool for strategic planning. It is not concerned with reporting but collecting data to be used by the management; in planning, organizing, staffing, directing and for control purposes.
Drury, C. (2009) states that “Management accounting differs from financial accounting in several distinct ways. Management accounting is concerned with the provision of information to internal users to help them make better decisions and improve the efficiency and effectiveness of operations”.
Even both branches often use same financial data to calculate figures, the requirements and objectives of using them are very different. Financial accounting generates information (e.g. financial report) to be used by external parties and is mandatory. The information has to be prepared periodically in specific regulatory formats so as to reflect accurate financial data of the organization as a whole.
In contrast, management...