acct notes - Accounting in itself forms the decisional...

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accounting methodology to fulfill the goals of an organization in a regimented process by developing strategy, building the necessary resources, and finally implementing the strategy. The procedure involves applying techniques (subject to accounting standards) to determine and differentiate information that helps determine the strategic path designed to accomplish the organizational objectives. However beyond the periphery accountancy is divided into two major branches, “Financial” accounting, “Management” accounting, and these are further subdivided. Like the name suggests financial accounting focuses on reporting to external parties, measuring and recording business transactions and preparing financial statements. Similarly management accounting deals with financial and non- financial information, measuring it and applying it toward achieving the company aims. Organizations are defined by accounting; from public down to sole ownership, it is central in giving the business its identity. The bookkeeping, forms the initial stage, or in other words is the keeping of the day to day records that are used to prepare financial reports. The methodology accounting is a detailed process which summarizes the organization’s progress, both financially and growth wise, in the form of statements, which are used as analytical tools by the external parties. Accountancy shapes the image of an organization and thus plays a crucial role in its development. Accounting in organizations calculates organizational performance for decision-making, coordination and motivation using techniques such as cost allocation, responsibility centers, transfer prices, product costing, performance measurement and budgeting. All are expected to contribute to increased firms value (Hopper, Northcott and Scapens 2007, p.3). Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions. Unlike financial accountancy information (which, for public companies, is public information), management accounting information is used within an organization typically for decision-making and is usually confidential and its access available only to a select a few (Management Accounting 2007 online). The role of management accounting in organizations is to provide assistance in planning, controlling, organizing, motivating and decision making. Assistance in planning The management accountant assists planning by providing information. This information may be about pricing, capital expenditure projects, product costs or competition. In the short-term planning process of budgeting, the management accountant provides information on past costs and revenues which may be used as guidance. The management accountant is also involved in the budgeting process itself. Assistance in controlling
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This note was uploaded on 02/23/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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acct notes - Accounting in itself forms the decisional...

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