Decision Making with Managerial Accounting
Managerial accounting is essential for decision making. Making the best choice depends on the manager's goals, the anticipated results from each alternative, and the information available when the decision is made (Schneider, 2012). The different techniques associated with managerial accounting are very helpful in the decisions that need to be made. In order to truly understand decision making with managerial accounting one must first discern exactly what managerial accounting means and some of the techniques associated with it. The definition of managerial accounting will be discussed along with the techniques of cost management techniques, budgeting, and quality control. Definition of Managerial Accounting
Managerial Accounting is the branch of accounting that meets managers' information necessities it is designed to assist the firm's managers in making business decisions, relatively few restrictions are imposed by regulatory bodies and generally accepted accounting principles, consequently, a manager must explain which data are significant for a particular purpose and which are not (Schneider, 2012). Managerial accounting provides the crucial data with which organizations are truly run (Folk, Garrison, & Noreen, 2002). Managerial accounts are responsible for preparing several different types of reports. These reports include reports that tell how well the business units have performed, give updates on key indicators, are used to investigate specific problems, and analyze a developing business situation or opportunity (Brewer, Garrison, & Noreen, 2005).
Role of Managerial Accounting and the Management Accountant
Management accounts are not only responsible for putting together the types of reports previously listed, their role is much bigger than that. The role of managerial accounting itself is to aid in the decision making process. The role of the management accountant is maintaining accounting records, preparing financial statements, generating managerial reports and analyses, and coordinating budgeting efforts (Schneider, 2012) The management accountant is an advisor, an internal consultant, and an essential part of management (Schneider, 2012). Ethical Issues/Concerns for the Management Accountant
For management accountants being an essential part of management comes with a lot of ethical responsibility. Having ethical responsibility means that management accountants must have integrity and be honest in the information that they present, it also means that they have a responsibility to report any unethical activities that they are aware of (Schneider, 2012). Some ethical concerns for the management account include the areas of competence, confidentiality, integrity, and credibility. These four areas make up the four components of the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management, issued by The Institute of Management Accountants (Schneider, 2012). Ethical behavior is important for management accountants and all parts of business because it is the lubricant that keeps the economy running (Brewer et al, 2005).
Managerial Accounting Techniques and their Application to Business Management decisions are basically based on some techniques that include financial statement analysis, activity-based cost, and marginal costing (Mazumder, 2007). These are just a few of the techniques used by management accounts to base management decisions. All three of these techniques have an application to business. Financial statement analysis is a historical document that delivers organized data according to rational and consistent accounting process and conveys an understanding of some financial aspects of a business firm (Mazumder, 2007). Financial statement analysis involves careful selection of data from financial statements in order to forecast the financial health of the company (Folk et al, 2002)....
References: Brewer, C. P., Garrison, H., R., & Noreen, W., E., (2005). Introduction to Managerial Accounting, 2nd Edition. New York, NY: McGraw-Hill/Irwin.
Folk, M., J., Garrsion, H., R., & Noreen, W., E., (2002). Introduction to Managerial Accounting. New York, NY: McGraw-Hill/Irwin.
Kis, M., J., G., & Bodenger, G., (1989). Cost Management Information Improves Financial Performance. Healthcare Financial Management, (43)5, 36.
Mazumber, C., B., (2007). Application of Management Accounting Techniques in Decision Making in the Manufacturing Business Firms in Bangladesh. The Cost and Management. 35(1), 5-18.
Schneider, A. (2012). Managerial Accounting. San Diego, CA: Bridgepoint Education, Inc.
Quality-Control, (2013). Meriam-Webster Dictionary. Meriam-Webster Inc. Retrieved on February 3, 2014, from http://www.merriam-webster.com/dictionary/quality%20control
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