Show MoreManagerial Accounting
Managerial Accounting Accounting is a crucial part in running a business. There are various forms of accounting that can be used, it is very important to know which technique is best to use for what companies. Once you figure out a particular technique to use, it is important to keep an open mind if there are any changes that need to take place in the business. By keeping an open mind helps the business adjust and be able to make the right decisions. Every business wants to make a profit; accounting is an important part in helping understand how profits and expense amounts are derived. One form of accounting I will focus on is managerial accounting or also known as management accounting. Managerial…show more content…
Financial accounting is primarily used by those outside of a company or organization. Unlike managerial reports, financial are created for a set period of time, such as a financial year. Managerial accounting is the branch of accounting that deals with confidential financial reports for the exclusive use of top management within a business (Small business, 2015). When it comes to the decision making process, people think accountants don’t have a role. They have a very important role in decision making, especially when it’s related to investments. Why accountants are so important is because they are involved in the explanation of financial statements, preparation of budgets, identification of measurable outcomes, and any other quantifiable information and statements. When the accountants provide a business with the proper information, including financial statements and other forms of quantitative evidences, they show an important role in taking relevant decisions (Major Role Accountants, 2014). Management functions can be classified into three functions. These functions are planning, directing, and controlling. In these three functions, managers make important decisions that have a huge impact on the business or organization. The first and basic function of management is planning. Planning is the most important function, this where you write down the future of the business or deciding the appropriate course of action to reach goals set. In planning you
Management Accounting Essay
2532 Words11 Pages
From the management accounting viewpoint of business, the process of decision-making is the main aim of management accounting. The way of how accountants make their decisions has been studied and investigated widely. It is very helpful in management accounting to categorize decisions in to strategic and tactical and in to short run and long run decisions.
The objective of management accounting is to make a good decision as the process of management decision-making is extremely subjective. A good decision is depends on the aims and purposes of management. As a result, the management has to set the aims and purposes in order to make decisions. For instance, the management is required to decide strategic aims such as the pricing strategy,…show more content…
The entire tools are regarded as mathematical models of decision-making.
For instance, the base of C V P analysis is the equation: I = P (Q) - V (Q) - F.
The above tool is relating to employing and using financial statements as a check list to recognize and discover decision-making fields and also it is used to find the most proper and suitable management accounting technique. There is one or more proper management accounting technique for each item on financial statements.
2.2 Financial Statements
Financial statements or what also called financial reports are formal documents of financial activities of business. Financial statements are regularly called as accounts in some law companies. In both short and long term, financial statements can offer a summary of a business' financial situation. There are four major financial statements. First one is Balance sheet which also called as statement of financial situation or condition. Balance sheet is a report on a company's assets, liabilities, and net equity as of a given point in time. Second basic is income statement which also called Profit and Loss statement or a "P&L". Income statement is a report of company's expenses, income and profits over a period of time. Third basic is taxes which are financial charges imposed by a state on an individual or on a legal entity.Fourth one is Statement of cash flow which is report on a