Accounting 7120x
Problem 1-4
Managers need accounting information and need to know how to use it. Critically evaluate this statement.
Accounting information provides managers with data needed to determine whether a business is at a profit or a loss, how much debtors owe, company’s liabilities, and much other financial information. Accounting measures business transactions and as such can help direct managers in the right course with concrete information. Principally accounting information is a tool for managers to make business decisions on a timely manner. For example, if by using accounting information, managers notice that the trend is for sales to decrease, then they can take measures to stop this trend. Maybe they need to change prices or decrease expenses to handle the down-trend. The key is that accounting gave them the clue that something may not be going according to plan and as we know planning is an important role in business management.
Lately we have witnessed an ever expanding basis of knowledge for the design of effective management accounting systems. New areas of expertise have continually provided new visions, opportunities and challenges to the conventional approaches. Perspectives drawn from economic theory have provided a sound basis for selecting information related for decision making and the application of mathematical skills has added to our potential for thoroughly analyzing complex problems. Moreover the developments in computer technology have ensured the means for providing immediate information to the managers who need it. Because of all of that, I think an accounting for managers needs no longer be seen as just a calculation of post events but as a function which has a dynamic and positive role in encouraging managers to learn from their past experiences and to anticipate the contingencies of their uncertain tasks.
There are signs of real progress. However, while a great deal of attention has been devoted to the different ways of designing
Managers need accounting information and need to know how to use it. Critically evaluate this statement.
Accounting information provides managers with data needed to determine whether a business is at a profit or a loss, how much debtors owe, company’s liabilities, and much other financial information. Accounting measures business transactions and as such can help direct managers in the right course with concrete information. Principally accounting information is a tool for managers to make business decisions on a timely manner. For example, if by using accounting information, managers notice that the trend is for sales to decrease, then they can take measures to stop this trend. Maybe they need to change prices or decrease expenses to handle the down-trend. The key is that accounting gave them the clue that something may not be going according to plan and as we know planning is an important role in business management.
Lately we have witnessed an ever expanding basis of knowledge for the design of effective management accounting systems. New areas of expertise have continually provided new visions, opportunities and challenges to the conventional approaches. Perspectives drawn from economic theory have provided a sound basis for selecting information related for decision making and the application of mathematical skills has added to our potential for thoroughly analyzing complex problems. Moreover the developments in computer technology have ensured the means for providing immediate information to the managers who need it. Because of all of that, I think an accounting for managers needs no longer be seen as just a calculation of post events but as a function which has a dynamic and positive role in encouraging managers to learn from their past experiences and to anticipate the contingencies of their uncertain tasks.
There are signs of real progress. However, while a great deal of attention has been devoted to the different ways of designing