Guiilermo Furniture Store Scenario
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Guillermo Furniture Store Scenario
Marisa Anderson
ACC/561
7/5/10
Alanna Jones
Guillermo Furniture Store Scenario
Guillermo’s furniture company withstood two financial setbacks during the 1990’s. In order to build and regain financial success, he has to decide which direction he wants his company to go using accounting best practices. He ultimately will have to decide which business venture will help him best balance his home and work life as well as succeed professionally.
Decision-making process
Budgets and Performance Reporting
Guillermo needs a general-purpose accounting system to help him make decisions. He can utilize a management accounting process that, “produces info for managers within an organization that will identify, measure and communicate info that will help fulfill obligations, while financial processes produce info for external parties” (Horngren, 2008). Both types help create budgets and performance reports, “by pinpointing where actual results differ from expected plans and create solutions where needed” (Horngren, 2008, p.6). Budgets help focus which costs are available and how they will affect the company. According to his current expense statement, if his patented coating is used, it will increase production costs but the benefits will outweigh the costs. The cost-benefit balance is when, “estimated costs are weighed against probable benefits” (Horngren, 2008). Careful budgeting will provide a better way to coordinate and implement future business decisions while keeping his focus.
Performance reports will provide necessary feedback regarding his operations because they compare results with actual plans. If he budgets properly, regular reporting will alert him of differing financials so that timely corrections can be made if needed and he’ll always know where he stands.
Ethics
Ethics and integrity will influence his decisions because they help ensure compliance. The Sarbanes-Oxley...
Marisa Anderson
ACC/561
7/5/10
Alanna Jones
Guillermo Furniture Store Scenario
Guillermo’s furniture company withstood two financial setbacks during the 1990’s. In order to build and regain financial success, he has to decide which direction he wants his company to go using accounting best practices. He ultimately will have to decide which business venture will help him best balance his home and work life as well as succeed professionally.
Decision-making process
Budgets and Performance Reporting
Guillermo needs a general-purpose accounting system to help him make decisions. He can utilize a management accounting process that, “produces info for managers within an organization that will identify, measure and communicate info that will help fulfill obligations, while financial processes produce info for external parties” (Horngren, 2008). Both types help create budgets and performance reports, “by pinpointing where actual results differ from expected plans and create solutions where needed” (Horngren, 2008, p.6). Budgets help focus which costs are available and how they will affect the company. According to his current expense statement, if his patented coating is used, it will increase production costs but the benefits will outweigh the costs. The cost-benefit balance is when, “estimated costs are weighed against probable benefits” (Horngren, 2008). Careful budgeting will provide a better way to coordinate and implement future business decisions while keeping his focus.
Performance reports will provide necessary feedback regarding his operations because they compare results with actual plans. If he budgets properly, regular reporting will alert him of differing financials so that timely corrections can be made if needed and he’ll always know where he stands.
Ethics
Ethics and integrity will influence his decisions because they help ensure compliance. The Sarbanes-Oxley...