Assessment 3: Essay (15%) Required: 2000 words essay Topic: Select one of well known service organisations in Australia a. compare their use of management accounting against financial accounting b....

Role of management accounting and financial accounting
TABLE OF CONTENTS
Introduction    3
Management accounting v/s financial accounting    3
Challenges in application of traditional costing system    5
Contemporary management accounting method    7
Conclusion    9
References    10
Introduction
Accounting plays a significant role in any business organization, as it helps in evaluating and identifying the financial performance of the company (Robson, et al. 2017). The major purpose of using various accounting techniques is to help stakeholders about taking better decisions on the basis of financial information.
The present essay is mainly concerned about management and financial accounting of a luxurious hotel of Australia, Park Hyatt. The selected posh hotel is situated in The Rocks neighbourhood, Sydney (Park Hyatt, 2018). Park Hyatt offers guests a kind of residential-style hotel with a reflection of the Australian landscape.
Management accounting v/s financial accounting
Accounting is referred to as a process of identifying and measuring various business activities, summarising and interpreting, and communicating the results to the management or other decision-makers. The major fields of accounting are management and financial accounting.
Management accounting
Management accounting also termed managerial accounting is the systematic presentation of the business activities to the management so that effectiveness in decision-making can be achieved (Henderson, et al. 2015). Such kind of accounting is used for the internal purpose, which is not regulated by any law. The user of management accounting is the internal management of the organization, and it aids in facilitating planning, strategic management and decision-making.
Financial accounting
The term financial accounting is concerned with classifying, analysing, summarizing and recording of the financial transaction of a business entity. The major purpose of financial accounting is to present a fair and appropriate picture of the financial affairs of the company. Shareholder’s equity statement, cash flow statement, income statement and balance sheet are the main components of financial statements.
    Management accounting
    Financial accounting
    This is used for internal decision-making
    Mainly it is used for external reporting
    Audit is not important
    Audit is important
    In this accounting monetary and non-monetary both aspects are included
    Financial accounting include only monetary information
    Focus on specific area of business
    Emphasis on entire organization
Companies use management accounting for several purposes such as facilitating the business decision-making process, operational and strategic planning and regulating business activities (Macve, 2015). In the context of the present essay, the hotel Park Hyatt uses managerial accounting for various reasons that are described below:
Business decisions
Management accounting is used by the selected organisation to make managerial and rational financial decisions. The information used by the company comes from a variety of sources, techniques and processes. Park Hyatt mainly uses variance analysis, a tool used to keep the company on the right track. Variance analysis is the technique used for the study of deviations of forecasted or planned behaviour versus actual behaviour (Khan, 2015). On the basis of various aspects, business decisions are taken by the company.
Better services to customers
By the use of management accounting, the posh hotel is able to serve the superior quality services to its customers and achieving customer satisfaction.
Proper organizing
Under the management accounting system, proper roles, responsibilities and authorities are clearly defined and explained (Trotman & Carson, 2018). Therefore, everyone in the hotel is clear about what tasks need to be performed and report to whom.
Motivating employees
Using management accounting system in Park Hyatt helps in enhancing and maintaining a high degree of morale and enthusiasm among employees. The reports are prepared by the company periodically and proper review is done before submitting to the top management, so that it is easy to identify that whom to promote or demote or to penalize or appreciating (Hertati, 2015).
Maximization of profit
Management accounting enables to identify the deviations and attaining effectiveness in the selected organisation in order to generate more revenue. Moreover, the tools used in the process of management accounting are reliable, and because of the reason, accurate data is supplied to the management of Park Hyatt.
On the contrary, financial accounting holds significant importance in every organization as it presents a clear and fair view of the monetary aspect of the business (Cirnu & DĂNĂCICĂ, 2015). The use of...