Accounting
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- Date Submitted: 09/19/2010 11:00 AM
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The Importance of Accounting in Decision Making
ACC 561
Importance of Accounting in Decision Making
Accounting is not normally the first direction most managers look when making decisions. However, considering and taking into account such things as budget, ethical practice in bookkeeping, and other accounting practices can be very influential and even pivotal to the decision making process. Guillermo Furniture Store is currently at a pivotal point in the company’s lifespan. The organization is currently faced with an increase in production and labor costs as well as an increase in equal quality competition within the market. Guillermo can use budget, balance, income, and expense reports to help them decide if they should streamline production procedures or merge with a larger competitor. Looking more closely at the accounting procedures at Guillermo can only aid management in strong productive decisions.
The Importance of a Budget:
The first item that Guillermo Furniture Store must consider before making any decisions about their future is their budget. The budget is the roadmap, or benchmark of how well the business is operating and can help pinpoint problem areas for changes. A budget is extremely necessary in future planning for any organization. It allows management to plan according to numbers and facts rather than speculation, and allows for timeline development. For example, if new machinery is needed to produce a product the funds need to be available for the equipment. A budget would allow management to produce a timeline in payments and availability of funds to obtain the machinery. A budget is also a tool that can be used to set goals in both production and revenue while tracking progress. This tracking can assist in planning for future years and discipline management in money allocation. For example, it forces management to consider; is the money best spent on upgrades or research and development? Finally a budget can aid an organization on...
ACC 561
Importance of Accounting in Decision Making
Accounting is not normally the first direction most managers look when making decisions. However, considering and taking into account such things as budget, ethical practice in bookkeeping, and other accounting practices can be very influential and even pivotal to the decision making process. Guillermo Furniture Store is currently at a pivotal point in the company’s lifespan. The organization is currently faced with an increase in production and labor costs as well as an increase in equal quality competition within the market. Guillermo can use budget, balance, income, and expense reports to help them decide if they should streamline production procedures or merge with a larger competitor. Looking more closely at the accounting procedures at Guillermo can only aid management in strong productive decisions.
The Importance of a Budget:
The first item that Guillermo Furniture Store must consider before making any decisions about their future is their budget. The budget is the roadmap, or benchmark of how well the business is operating and can help pinpoint problem areas for changes. A budget is extremely necessary in future planning for any organization. It allows management to plan according to numbers and facts rather than speculation, and allows for timeline development. For example, if new machinery is needed to produce a product the funds need to be available for the equipment. A budget would allow management to produce a timeline in payments and availability of funds to obtain the machinery. A budget is also a tool that can be used to set goals in both production and revenue while tracking progress. This tracking can assist in planning for future years and discipline management in money allocation. For example, it forces management to consider; is the money best spent on upgrades or research and development? Finally a budget can aid an organization on...