Free 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
Management Accounting Basics
And more
Course Modules:
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Lesson 1: Management Accounts Introduction
Lesson 2: Preparing Management Accounts
Lesson 3: The Profit and Loss Statement
Lesson 4: The Balance Sheet
Lesson 5: Aged Debtors & Aged Creditors
Lesson 6: Graphs and Other Custom Reports
Jump to:
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An Introduction to Management Accounts
How to Prepare Management Accounts
Creating a Profit and Loss Statement
Download a Profit and Loss Template
Download a Balance Sheet Template
Management Accounting Course: Management Accounts Made Easy
Part 1: An Introduction to Management Accounts
Module overview:
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Course Introduction
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What is management accounting?
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Who compiles management accounts?
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And more
1.1 What are management accounts?
Management accounts are financial reports compiled for company directors, business owners, and shareholders. They contain crucial business information related to sales, cash flow, and profitability.
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Management accounts typically consist of a profit and loss statement and a balance sheet at a minimum. They are generally compiled on a monthly or quarterly basis.
1.2 Who compiles management accounts?
Management accounts are usually compiled internally by the finance team or the company accountant. If the business is small, an outsourced bookkeeper or accountant is used.
1.3 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.
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In short, management accounts help a business owners, directors, and managers understand how the business is performing financially.
1.4 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. They show financial information, including tax, for a twelve-month period, i.e. the entire financial year.
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Management accounts are compiled internally on a monthly or quarterly basis. They consist of various reports, which are decided by those who review them.
Management Accounting is easier when you understand the basics of bookkeeping and accounting:
The ULTIMATE Accounting Course
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Part 2: Preparing Management Accounts
Module overview:
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Preparing management accounts
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Management accounts checklist
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Accounting software
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Excel
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And more
2.1 How do you prepare management accounts?
The following tasks must be completed to ensure a set of management accounts is accurate:
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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 management accounts accessible and accurate.
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Wages journals. Wages should have been run for the period, and wages journals must be posted to the financial accounts.
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Reconciliations. All accounts, including customer and supplier accounts, bank accounts, credit card accounts, loan accounts, and tax accounts, must be reconciled for the period.
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Filing of tax reports. All tax returns, including VAT (sales tax) reports and payroll reports, must be filed.
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Other, more advanced accounting tasks should be completed. These include:
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Prepayments and accruals. To ensure that all data displayed in the management accounts is relevant to the accounting period, prepayments and accruals must be made. A prepayment moves an expense from the reporting period to a future period if the expense is shown in the reports but relates to a future period. An accrual moves an expense from a future period to the reporting period if the cost is not shown in the reports but relates to the reporting period. Accruals and prepayments are covered in my free accruals and prepayments course.
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Depreciation. All fixed assets that can be depreciated should be. Depreciation is the cost of assets losing value due to wear and tear. Depreciation is covered in my free depreciation course.
2.2 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.
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Management accounts can be manually created using Microsoft Excel or similar software; however, using Excel is time-consuming and prone to errors. I demonstrate how to make Excel management accounts in the video above. This is to help you understand how to compile management accounts from scratch rather than suggesting that Excel should be used. If you need accounting software, I highly recommend Xero. With this link, you will get 90% off.
2.3 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:
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Profit and loss statement
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Balance sheet
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Aged debtors
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Aged creditors
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Cash flow forecast
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Sales and profit graphs
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Notes and analysis
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This course will cover each of the above financial reports in detail.
Management accounting is much easier with accounting software.​
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Click here for an exclusive and special discount on Xero.
Part 3: The Profit and Loss Statement
Module overview:
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What is a profit and loss statement?
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How to compile a profit and loss statement
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Key items and terminology
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And more
3.1 What is a profit and loss statement?
A profit and loss statement shows an entity's overall profit or loss for a selected period.
It displays an entity's sales, expenses, and profit (or loss).
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A profit and loss statement can also be called an income statement, a P&L, or the statement of comprehensive income.
3.2 How to create a profit and loss statement
Here is a easy-to-follow step-by-step guide:
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1. First, the bookkeeping, journals, reconciliations and other adjustments must be made as detailed in part two of this course. If these are not complete, the profit and loss statement will not be accurate.
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2. Total sales. These will be shown at the top of the statement.
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3. Total costs of sales. These will be shown under sales.
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4. Calculate gross profit and enter this below the cost of sales figure. Gross profit is the sales minus the cost of sales.
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5. Detail expense (overheads) totals. These will be listed below the gross profit figure.
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6. Calculate net profit (or loss) and enter this below the expenses. Net profit is calculated as gross profit minus the expenses.
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Here is an example of a profit and loss statement:
Download a profit and loss template:
3.3 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.
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It's a comprehensive financial report for tracking sales and profit performance, as well as reviewing expenditures.
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More sophisticated profit and loss statements feature multiple columns, allowing readers to compare the results of the reporting period with those of previous periods.
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Take my free financial analysis course if you want to analyse a profit and loss statement in more detail.
Part 4: The Balance Sheet
Module overview:
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What is a balance sheet?
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Preparing the balance sheet
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Assets, liabilities, and equity
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Key items and terminology
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And more
4.1 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.
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A balance sheet is also known as the statement of financial position.
4.2 How to create a balance sheet
Here is a easy-to-follow step-by-step guide:
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1. First, the bookkeeping, journals, reconciliations, and other adjustments must be made as detailed in part two of this course. If these are not completed, the balance sheet will not be accurate.
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2. List and total assets. These will be shown at the top of the statement. Assets are often categorised into two main groups: fixed assets and current assets.
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3. List and total liabilities. These will be shown under total assets in the centre of the statement. Liabilities are often categorised into two main groups: long-term liabilities and current liabilities.
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4. List and total equity. This will be shown under total liabilities at the bottom of the statement.
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5. Ensure that total assets equal total liabilities and equity.
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Note: Some balance sheets don't show assets equal to liabilities plus equity, but instead show assets minus liabilities equal to equity.
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Here is an example of a balance sheet:
Download a balance sheet template:
4.3 What is the purpose of the balance sheet?
The balance sheet shows what a company or business owns and what it owes.
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It's a comprehensive financial report for tracking debt, assets, and cash, as well as evaluating an entity's financial health.
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Take my free financial analysis course if you want to analyse a balance sheet in more detail.
Part 5: Aged Debtors & Creditors
Module overview:
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What are aged debtors and creditors?
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How to compile an aged debtors report
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How to compile an aged creditors report
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And more
5.1 What are aged debtors and creditors?
Aged debtors are the outstanding sales invoices owed by customers. It details the debts owed by trade debtors. An aged debtors report can also be called an accounts receivable report.
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Aged creditors are the outstanding purchase invoices owed to suppliers. It details the debts owed to trade creditors. An aged creditors report can also be called an accounts payable report.
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The reports detail outstanding invoices as of a specified date.
5.2 How to create aged debtors and creditors reports
Aged debtors and creditors reports can be easily created using accounting software such as Xero or Sage. However, manually creating these reports using Excel requires some effort.
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Here is a step-by-step guide for accounts receivable:
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1. Create a column for customer names
2. Create a column for customer account references (optional)
3. Create a column for outstanding invoices which are within payment terms
4. Create a column for overdue invoices
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Here is a step-by-step guide for accounts payable:
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1. Create a column for supplier names
2. Create a column for supplier account references (optional)
3. Create a column for outstanding invoices which are within payment terms
4. Create a column for overdue invoices
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Below are some examples:
Download aged debtors and aged creditors templates:
Part 6: Other Reports
Module overview:
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Other reports
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Graphs and charts
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Budget variance
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Forecasts and projections
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And more
6.1 Which other reports can be included in management accounts?
Creative accountants include additional reports in a set of management accounts. These could include:
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Historical sales and expense reports, such as graphs, tables, or charts
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Budget and budget variance reports
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Forecasts
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Notes and analysis of the management reports
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Other reports which are helpful to the business or requested by company directors. This could include cash flow forecasts.