accounting for decisions

Accounting refers to the process of recording and reporting financial transactions, including the origin of the transaction, its recognition, processing, and summarisation into financial statements. [3] This very process of recording, summarising, analysing, and interpreting financial activities exists to permit individuals and organisations to make informed judgments and decisions. While all the information it deals with is in direct relation to the past it is strategically significant in determining the future. Basic tasks such as bookkeeping create valuable information to decision makers whether they are sharehol

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A manager, lender, or analyst can use any ratio that is relevant to a particular decision to influence his choice. Management accounting is much more detailed giving, for example, information about individual products, factories, cost centres and so on that is not usually released to outsiders. The information provided is also wider in scope including, for example, future as well as past cost, revenue and profit. Only very small companies can be managed without special internal financial information. While horizontal analysis highlights changes over time, no single technique provides a complete picture of a business. [2] Although both types of accounting share the same fundamental sources, the information supplied by management accounting differs from the information in financial accounting for outsiders in several important respects. Vertical analysis of a financial statement reveals the relationship of each statement item in regard to the total, 100 percent figure. Together managers use these three analysis to give different perspectives on relevant issues and pending decisions.

Financial accounting deals with the recording of transactions and the financial position of a business principally for the benefit of external parties [1]. The information it provides, how it is interpreted and who exactly uses this information has been outline, and their clear purpose of using it as an aid to decision making illustrated.

Management accounting is the process of identification, measurement, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within an organisation and to assure appropriate use of and accountability for its resources. The structures and definitions used in management accounting depend greatly on the businesses specific requirements for decisions and communication rather than financial accounting regulations.

Internal accounting systems have to be reliable

Examples of insider decisions

Compare data with competition, industry standards etc………

Conclusion:

Throughout this essay the relevance of accounting information in regard to the past transactions of a business has been established. It has been shown that accounting in essence is a tool not only managers, but external stakeholders use to make decisions.

Common topics in this essay:
, Conclusion Throughout, management accounting, financial accounting, financial data, vertical analysis, decisions information, analytical tool, information accounting, communication financial, process recording, horizontal analysis,

Approximate Word count = 790
Approximate Pages = 3 (250 words per page double spaced)

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