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Unformatted text preview: Introduction to BUAD 250a Unit 1 Accounting is the language of business. The most significant implication is that business managers need the ability to communicate and think in the accounting medium if managers and enterprises will succeed. Managers must have the confidence and ability to ask relevant questions and then fully understand the responses to and significance of those answers. Recent developments in the financial reporting arena underscore the need for top management to be on top of the accounting system. Effective communicating in accounting requires skill at speaking, listening, writing and reading. Successful managers can communicate in all of these media. Successful managers may not be accountants but still need appropriate accounting training to ask about important issues and then to understand implications of information in the answer. When managers are time constrained, they and their subordinates need to be able to communicate effectively and efficiently to make timely and proper business decisions. Time constrained managers do not have the time to function with another information system. If a manager lacks adequate training to communicate effectively about in a critical decision-making situation, that manager will be unable to maximize the value of the firm or of his/her own career. Often managers must be able to spot right, wrong and incomplete answers or advice. This is true in every decision-making opportunity. I was told by a former CEO of a public firm that upward mobility of his subordinates was limited if he determined that a promotion candidate was lacking basic accounting skills and the ability to communicate in that medium. Recently, I coached a senior executive with a major public firm who had been told in a performance review that his accounting and finance skills would be barriers to his further progress within the firm. He resolved to acquire accounting and finance education and remove this roadblock to his career path. Managers must make decisions involving allocation of scarce resources within a firm whether there is a profit motive or not. These decisions should reflect expected future results. Expected future results are often couched in accounting metrics. A managers performance reviews are often based, in part, on results measured in financial statement terms. Common uses of accounting information by managers might include some or all of these: establishing proper blend of different capital sources, deciding how many and which operating assets to acquire, identifying managers for promotion, deciding how to manage the firms liquidity needs, evaluating the current operating results of the entity, anticipating the future operating results as well, evaluating actual results relative to expected results, and reaching appropriate decisions involving dividend payments to owners....
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- Fall '06