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Management Accounting Course

This page contains our free online course for learning management accounts. It will teach you the basics of management accounting, including templates, practical examples, and a step-by-step guide to creating a set of management accounts.

The Course Covers:
 

  • The Fundamentals of Management Accounts

  • Compiling Management Accounts

  • Using Management Accounts

  • Financial Statement Basics 

 

Course Modules:

Management Accounting Made Easy

Management Accounts Course

Part 1: An Introduction to Management Accounts

Module overview:

  • Course Introduction 

  • What is management accounting?

  • Who compiles management accounts?

  • And more

What are management accounts?

Management accounts are a set of financial reports compiled for company directors, business owners, and shareholders. They contain crucial business information related to sales, cash flow, and profitability. 

Management accounts usually consist of a profit and loss and a balance sheet at a minimum. They are generally compiled every month or quarter. 

Who compiles management accounts?

Management accounts are usually compiled internally by the finance team or company accountant. An outsourced bookkeeper or accountant is used, if the business is small. 

Why are management accounts important?

A set of management accounts helps directors, owners, and shareholders evaluate a business's performance. The accounts highlight possible financial weaknesses and strengths. They are a fantastic way to analyse growth and track financial goals. 

Management accounts vs financial accounts?

Financial accounts are compiled by a tax accountant at year-end. They consist of a profit and loss statement and a balance sheet for a business, company, or other entity's financial year. 

Management accounts are compiled internally on a monthly or quarterly basis. They consist of various reports decided by those who review them. 

Part 2: Preparing Management Accounts

Module overview:

  • Preparing management accounts

  • Management accounts checklist

  • Accounting software 

  • Excel

  • And more

Preparing Management Accounts

How do you prepare management accounts?

The following tasks must be completed to ensure a set of management accounts is accurate: 

  • Bookkeeping. All data entry must be completed for the period, including recording all sales invoices, purchase invoices, customer payments, supplier payments, and bank transactions. A double-entry bookkeeping system will make compiling a set of management accounts easier and more accurate. 

  • Wages journals. Wages should have been run for the period, and wages journals must be posted to the financial accounts. 

  • Reconciliations. All accounts must be reconciled, including customer and supplier accounts, as well as bank, credit card, loan, and tax accounts, for the period. 

  • Filing of tax reports. All tax returns, such as VAT (sales tax) reports and payroll reports, should be filed. 

There are other more advanced accounting tasks, which should be completed. These include: 

  • Prepayments and accruals. To ensure all data showing on the management accounts is relevant to the accounting period, prepayments and accruals must be done. A prepayments moves an expense from the reporting period to a future period, if the expense shows in the reports but it relates to a future period. An accrual moves an expense from a future period to the reporting period, if the expense is not showing in the reports but it is related to the reporting period. Accruals and prepayments are covered in my free accruals and prepayments course

  • Depreciation. All fixed assets that can be depreciated should be. Depreciation is covered in my free depreciation course

Using accounting software vs Excel

Using accounting software such as Sage, Xero, or QuickBooks Online, you can more quickly complete the above tasks and create management accounts. 

Management accounts can be manually created using Microsoft Excel or similar software, although using Excel is time-consuming, and there is room for error. In this series, I will show you how to create management accounts using Excel. This is to help you understand how to compile management accounts from scratch, rather than suggest that Excel should be used. 

Which financial reports should be included in management accounts?

At a minimum, a set of management accounts should include a profit and loss statement and a balance sheet for the period. However, management accounts can consist of the following:

  • Profit and loss statement

  • Balance sheet

  • Aged debtors

  • Aged creditors

  • Cash flow forecast

  • Sales and profit graphs

  • Notes and analysis

This course will cover each of the above financial reports in detail. 

Profit and loss statement tutorial

Part 3: The Profit and Loss Statement

Module overview:

  • What is a profit and loss statement?

  • How to compile a profit and loss statement

  • Key items and terminology 

  • And more

What is a profit and loss statement?

A profit and loss statement shows the overall profit or loss of an entity for a selected period. 

 

It displays an entity's sales, expenses, and profit (or loss). 

A profit and loss statement can also be called an income statement, the p&l, or the statement of comprehensive income. 

How to create a profit and loss statement

Here is a easy-to-follow step-by-step guide: 

1. First of all, the bookkeeping, journals, reconciliations and other adjustment must be done as detailed in part two of this course. If these are not complete, the profit and loss statement will not be accurate. 

2. Total sales. These will show at the top of the statement. 

3. Total costs of sales. These will show under sales. 

4. Calculate gross profit and enter this below the cost of sales figure. Gross profit is the sales minus the cost of sales. 

5. Detail expense (overheads) totals. These are listed below the gross profit figure. 

6. Calculate net profit (or loss) and enter this below the expenses. Net profit is gross profit minus the expenses. 

Here is an example of a profit and loss statement:

Profit and loss statement example

Download profit and loss template:

What is the purpose of the profit and loss statement?

The profit and loss statement shows whether a company or business is profitable or not and by how much. 

It's a super financial report for tracking profit performance and reviewing expenditure. 

More sophisticated profit and loss statements have multiple columns, enabling readers to compare the results of the reporting period to previous periods. 

If you are interested in how to analyse a profit and loss statement in more detail, take my free financial analysis course. 

Part 4: The Balance Sheet

Module overview:

  • What is a balance sheet?

  • Preparing the balance sheet

  • Assets, liabilities, and equity 

  • Key items and terminology 

  • And more

Balance Sheet Tutorial

What is a balance sheet?

A balance sheet shows what a company or business owes and what it owns

 

It displays an entity's assets, liabilities, and equity. If you are unfamiliar with these terms, take our free accounting course

A balance sheet can also be called the statement of financial position. 

How to create a balance sheet

Here is a easy-to-follow step-by-step guide: 

1. First of all, the bookkeeping, journals, reconciliations and other adjustment must be done as detailed in part two of this course. If these are not complete, the balance sheet will not be accurate. 

2. List and total assets. These will show at the top of the statement. Assets are often grouped by fixed assets and current assets. 

3. List and total liabilities. These will show under total assets in the centre of the statement. Liabilities are often grouped by long-term liabilities and current liabilities. 

4. List and total equity. This will show under total liabilities at the bottom of the statement. 

5. Ensure that total assets equals total liabilities and equity. 

Here is an example of a balance sheet:

Balance Sheet Example

Download balance sheet template:

What is the purpose of the balance sheet?

The balance sheet shows what a company or business owes and what it owes. 

It's a super financial report for tracking debt, assets, cash, and checking the financial health of entity. 

Some balance sheets don't show assets = liabilities + equity, but instead show assets - liabilities = equity. 

If you are interested in how to analyse a balance sheet in more detail, take my free financial analysis course. 

Profit and loss statement tutorial

Part 5: Aged Debtors & Creditors 

Module overview:

  • What are aged debtors and creditors?

  • How to compile an aged debtors report?

  • How to compile an aged creditors reports?

  • And more

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