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The role of accounting
The importance of ethics in accounting
The importance of ethics in accounting
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Recommended: The role of accounting
Introduction
Managerial accountants need to use accounting information in seeing to it that they are able to plan, evaluate the company performance, manage risks and control the business operations in a manner that is deemed beneficial to the business as a whole. This can be achieved through: having high standards of ethics in all situations; employing the techniques of management reports, budgetary control, and analysis of fund flows and financial statements; making prudent capital investment decisions; and maintaining continuous quality control systems.
The Definition of Managerial Accounting
Managerial accounting which is a synonym for management accounting refers to the provision of accounting information to the managers of a particular organization which they will in turn utilize in making informed decisions that touch on the business and thus allowing them to carry out their control and management duties effectively (Caplan, 2006). Management accounting is a preserve of chartered management accountants though some companies my use other types of accountants to measure and report information regarding the economic activities of those companies. According to the Chartered Institute of Management Accountant (CIMA), managerial accounting entails a process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating information of accounting information by managers with the aim of assuring appropriate use of available resources and accountability.
Subsequent to obtaining the accounting information, managerial accountants will then proceed to use it to plan, evaluate the company performance and also control the business operations. With regards to planning, the managers are required to make decis...
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... The above ethical standards can be accomplished through the utilization of the managerial accounting techniques of budgetary control, management reports and analyzes of fund flow and financial statements. For any business to maximize on its profits, the management accountants should be able to establish the capital structure of the firm and come up with ways of manipulating the debt/equity and the debt/asset ratios which should be positively related to profitability ratios. Being able cut of costs, increase on revenues and savings during budgeting is a sure way of safeguarding a smooth running of a business. When the quality is good, customers get more satisfaction thus ensuring constant purchases which improves the business revenues. A high quality of products or services is achieved through quality controls that are overseen by management accountants.
References
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
The functions of managerial accounting include planning, decision-making, controlling, and evaluation. To make good decisions, managers must constantly adapt to technological changes, changes in the organization's needs, and new approaches to other functional areas of business-- marketing, production, finance, organizational behavior, and corporate strategy. Planning is the setting of goals and developing strategies and tactics to achieve them. Controlling is concerned with achieving the goals and evaluating performance. The success of an organization lies heavily on the shoulders of those making these decisions.
Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002)
On the other hand, managerial accounting is category of accounting that provides special purpose statements, and it reports to management and other persons inside the
Cost Accounting: Its role and ethical considerations Introduction: Accounting is the process of identifying, measuring, and communicating economic information about an entity for the purpose of making decisions and informed judgements. The major areas of within the accounting are: Financial Accounting, Managerial Accounting/Cost Accounting and Auditing- Public Accounting Managerial accounting is concerned with the use of economic and financial information to plan and control the activities of an entity and to support the management in planning and decision-making process. Cost accounting is the subset of managerial accounting and it helps management in determination and accumulation of product, process or service cost. Role of Cost Accounting: Increased competition and uncertain business conditions have put significant pressure on corporate management to make informed business decisions and maximize their company?s financial performance. In response to this pressure, a range of management accounting tools and techniques has emerged.
Managerial accounting which is a synonym for management accounting refers to the provision of accounting information to the managerial accountants of particular organizations which they will in turn utilize in making informed decisions that touch on the business. This allows them to carry out their control and management duties effectively (Gao, 2002). According to Hall (2010), managerial accounting entails a process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating information of accounting information by managers with the aim of assuring appropriate use of available resources and accountability.
Positive accounting theory is arguably an explanatory of accounting practice; economic based theory. RL Watts and JL Zimmerman developed positive accounting theory in 1980s at the William E School of Administration at the Rochester University. People do not know what they want at times. So there are different options available to accountants. There are some logical facts to choose one specific method. On choosing one specific method, accountants will maximize their own benefit first, and then company benefit, shareholder benefit and at last social benefits. A specific method will allow accountants to feel better to do their work as they like them the way they know and they way they are best at doing (Jayne Godfrey). For instance, accountant will write accumulated depreciation on asset value side for big company whereas when a poor balance sheet, it is better to put accumulated depreciation on credit side, so the company will have extra money in their debit (Ken Leo, John Hoggett, 2012). Accountants will use choice of accounting method depending on the situation. Positive accounting theory consists of different types of hypothesis such as bonus plan, political cost and debt hypothesis, which allow the managers to choose one specific method over another. It is accountants’ theory and it is descriptive and accountants will tell what to record.
Increased competitions and high expectations of the companies have put high pressure on the accountants. Making the most accurate decisions and helping the companies maximize their financial performances have become almost basics of the accountants’ duties. Many business owners question why they need to seek the services of an accountant when they can do many things themselves with the help of the technological tools. Today, an accountant must provide more than what technology can do for the company. They have to set business plans, goals and provide guide to achieve them with less cost and most profit. They have to advise business on their investments and project the most profitable decisions for the company. Beside the investments, accountants expected to consult the firms on their consolidations with other firms. Making decisions and researches on reducing costs, and sharing resource while providing variety of offerings puts lots of stress on the
Managerial Accounting plays very important role in a nonprofit organization. Accounting analysis techniques will help managers within organization to make better management decisions. With the help of these techniques managers making decisions about selecting equipment, determining whether costs are being efficiently incurred, monitoring financial and nonfinancial performance measures, and developing strategic plans.
Accounting aids the government and organisations in decision making for their financial stability. This numerical data helps solve real life problems and contributes to how the economy and businesses perform.
The accounting equation is the foundation or basic of accounting systems. The equation maintain for all transactions and business activities. Every asset that the company hold is always equal to the liabilities and equity. Therefore, the accounting equation is : ASSETS = LIABILITIES + EQUITY. For example, when we start a company, we must take a loan from investors or any of the institutions. Now, we take a look at each accounting equation starting with the asset.
The revenue/cost period-: Revenue and the cost period in accounting that the company get income from normal business activities. It’s referred to normal business income that the company got by selling their product and service.
The four basic financial statement analysis procedures are horizontal, percentage, vertical, and ratio (Edmonds, Tsay, & Olds, 2011).
We are living in the era of internationalization and the each country’s economy is connected to each other forming a very large economy. Thus the demand for people in business is getting bigger and bigger. Every day, more and more students choose to study business courses in universities. There are lots of majors in business and among these majors; accounting is called the language of business. The language makes you able to communicate with other people and accounting serves as the method of communicating business information.
All accounting reports are shared by all levels of accounting managers. The management of the information which at the accounting department is one of the most important factors in determines the effectiveness and efficiency of the department. The information that gathers included the invoice, account document, payment, draft, banking document and etc. It is important to ensure the validity and the accuracy of the information that provided to the department.