Financial accounting is a different representation of costs and financial performance that includes a company's assets and liabilities. Cost accounting can be most beneficial as a tool for management in budgeting and in setting up cost control programs, which can improve net margins for the company in the future. One key difference between cost accounting and financial accounting is that while in financial accounting the cost is classified depending on the type of transaction, cost accounting classifies costs according to information needs of the management. During the early 19th century when David Ricardo and T.
Arise Warren and Phielp E. Fees principles of accounting P. It means a specific accounting action being considered by management. In applying this concept of relevance it is important to note or recognize some accounting information, that are of high degree of relevance for one to use.
It means that there is need for accounting records to contain in an accurate data of records and proper update information outdated data can lead unwise decision. In some cases time timeliness concept may require the accountant to prepare a report.
On the pre-arranged scheduled such as daily weekly or monthly work. In the other cases, reports are prepared in regular bases or only when needed. It means the need for report to be correct within a constraint of the report is vital. If the report is not precise e. And inaccurate report of a customer tax payment is presented to the management, an unwise decision would be taken in order to grant a credit.
As previously indicated, the concept of accuracy must be applied within the constraints of the use to be jade of the report in other records, there are occasions when accuracy should be scarified for less precise data that are worse useful to management e.
In addition, it should be noted that there are inherent inaccuracy accounting data that are based in estimate and approximates e.
The cost of other product would be limited. Usefulness in establishing the product selling price. It refers to as the need for report to be clear and understandable. Informal and contents reports that are clear and understandable will enable management to focus on significant factor in planning and controlling operations that is reports on actual are expected to analysis.
It refers to as the equipment that the report should be brief and straight to the point. Although the report must be completed and include all relevant information. The inclusion of unnecessary information wastes management time and makes it more difficult for management.
Management should usually be broad in scope and present summaries of data rather than small defiles. In applying these guidelines. Consideration must be given to the specific needs of manager and the reports. In preparing reports cost are incurred and a primary consideration is that the value of the management report must at least be equal to the cost of producing them.
This covering cost benefit evaluation must be considered, no matter how information report may be. Therefore a report should not be prepared if its cost exceeds the benefit derived by users.
Bankers and suppliers need accounting information with which to appraises the asses the risk involved in making loans and granting credit.
Lending loans and granting credit to government agencies are concerned with the financial activities of the business organization for purpose of taxation and regulation. Employer and their union representative are vitally interested in the stability and probability of the organization that hire them.
The independent individual whoa re must involved with the end of product of accounting are those charged with the responsibility of directing the operation of the enterprises. They are of term referred to as management managers relay upon accounting current operation.
Diagrammatically illustration of the process of producing accounting information to users are as follows.
From the above diagram it is clear that accounting is a language which communicates financial information to people who have an interest in organizational, managers, shareholder and potential investors, employees, creditors and the government managers require accounting information which would assist them in their decision making and control activities for examples, information needed on the estimated selling prices, costs demand competitive position and profitability or various products which are made by the organizational shareholders, requires accounting information on the value of the investment of the income which derived from their shareholding.
Government agencies like the statistical officers collect accounting information and need such information for the details of sales activities, profits investment, stock, dividend paid, the proportion of profit absorbed by taxation and so on in addition the inland revenue needs accountants information taxation.
All these information are important for determining policies to manage the economy. Accounting information is not confined to business organization above, accounting information for the individual is also important for instance, credit will only be extended to an individual after the portative borrower has finished a reasonable accounting for his private financial affairs.Problem Solving Problem Solving is the Capacity and the Ability to Evaluate Information and to Predict Future Outcomes.
The Ability to Seek out Logical Solutions to Problems, Calmly and Systematically, without making things worse. Decision Making - Cause and Effect. "There are no Problems, only Solutions" Every Problem can be solved, you just have to learn how to solve it.
Cost accounting is an accounting method that aims to capture a company's costs of production by assessing the input costs of each step of production as well as fixed costs. Due to increased interest in FASAB cost accounting guidance, staff has assembled selected managerial cost accounting resources on this webpage.
Decision Making and the Role of Accounting 3 used have developed from the earliest known accounting records. As a profession, accounting has evolved in response to society’s need for economic information to. Annales Universitatis Apulensis Series Oeconomica, 15(2), , THE ROLE OF MANAGEMENT ACCOUNTING IN THE DECISION MAKING PROCESS: CASE STUDY CARAŞ SEVERIN COUNTY Adela Breuer1 Mihaela Lesconi Frumuşanu2 Andra Manciu3 ABSTRACT: Management accounting is an important part of the economic information system.
Essentials of Cost Accounting for HEALTH CARE ORGANIZATIONS Third Edition STEVEN A. FINKLER, PhD, CPA Program in Health Policy and Management .