Guillermo Furniture Store Scenerio

In business, budgets and performance reports are extremely important. A budget is “a quantitative expression of a plan of action and an aid to coordinating and implementing the plan”, (Horngren, 2008), and determines what moves can be made in business. Performance reports provide feedback from plans and can help determine where plans are ineffective and can be changed. Overall, budgets and performance reports work hand in hand because they help compare the actual amounts to the estimated amounts. Since competitors have entered the market in Sonora, Mexico, Guillermo’s Furniture Store has experienced a decrease in his business. The competitors came in and depleted his business by offering low prices and high tech production. Guillermo needs to evaluate his budget and performance reports to determine if he will be able to continue to exist among his competition.
To continue the furniture store is a very important decision to make, and the budget and performance reports need to be considered in this decision. Guillermo’s budget is very important in the planning of his business. The budget is the basis for a business, and the budget will let Guillermo know if he is able to stand out against his competition. Once Guillermo developed his plan by analyzing the competition and the way their furniture is produced, he could use his performance reports to determine if his furniture business could continue to operate and be productive against the competition. He could also use his performance reports to correct any variances, or deviations from plans, which can be used to correct his budget.
Ethics play an important role in any business, but it is especially important when dealing accounting decisions. Ethics are defined as “the field that deals with human conduct in relation to what is morally good and bad, right and wrong”, (Horngren, 2008). With Guillermo’s Furniture Store, his ethics can have great influence over his accounting decisions. Guillermo seems to be very...