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.
Jump to:
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
The Course Covers:
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The Fundamentals of Management Accounts
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Compiling Management Accounts
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Using Management Accounts
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Financial Statement Basics
Course Modules:
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Lesson 1: Management Accounts Introduction
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Lesson 2: Preparing Management Accounts
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Lesson 3: The Profit and Loss Statement
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Lesson 4: The Balance Sheet
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Lesson 5: Aged Debtors & Aged Creditors
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Lesson 6: Graphs and Other Custom Reports
Management Accounting 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
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.
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. If the business is small, an outsourced bookkeeper or accountant is used.
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 monthly or quarterly. They consist of various reports decided by those who review them.
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
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, credit card, loan, and tax accounts, must be reconciled for the period.
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Filing of tax reports. All tax returns, such as VAT (sales tax) reports and payroll reports, should be filed.
Other more advanced accounting tasks that should be completed. These include:
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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 prepayment moves an expense from the reporting period to a future period if the expense shows in the reports but 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 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 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. I will show you how to make Excel management accounts. This is to help you understand how to compile management accounts from scratch rather than suggest that Excel should be used. To learn to run management reports using accounting software, take my accounting software courses.
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
This course will cover each of the above financial reports in detail.
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
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).
A profit and loss statement can also be called an income statement, a 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, 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.
2. Total sales. These will be shown at the top of the statement.
3. Total costs of sales. These will be shown 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 will be 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:
Download a 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 sales and profit performance and reviewing expenditures.
More sophisticated profit and loss statements have multiple columns, enabling readers to compare the reporting period's results to previous periods.
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
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, 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.
2. List and total assets. These will be shown at the top of the statement. Assets are often grouped into fixed assets and current assets.
3. List and total liabilities. These will be shown under total assets in the centre of the statement. Liabilities are often grouped into long-term liabilities and current liabilities.
4. List and total equity. This will be shown under total liabilities at the bottom of the statement.
5. Ensure that total assets equals total liabilities and equity.
Note: Some balance sheets don't show assets = liabilities + equity but instead show assets - liabilities = equity.
Here is an example of a balance sheet:
Download a 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, and cash and checking an entity's financial health.
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 reports
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And more
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 receivables report.
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.
The reports detail outstanding invoices at a specified date.
How to create aged debtors and creditors reports
Aged debtors and creditors reports can be easily created using accounting software such as Sage, Xero, and QuickBooks Online. However, making these reports manually using Excel requires some work.
Here is a step-by-step guide for accounts receivables:
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
Here is a step-by-step guide for accounts payables:
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
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
Which other reports can be included in management accounts?
Download the final template:
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.
Take another free finance course:
Learn Accruals and Prepayments
Learn Financial Analysis
