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Posted: 2006-09-05 / Author: Kadence Buchanan
The Basics Of Managerial Accounting For Small BusinessThe Basics Of Managerial Accounting for Small Business: A variety of organisations affect our daily lives.
Manufacturers, retailers, service firms, agribusiness
companies, non-profit organisations and governmental agencies
provide us with a vast array of goods and services. All of
these companies share two common things. First, they all have a
set of goals or objectives. A bank's goals might be
profitability and customer service, or a hotel's goals might be
total quality services and cost minimisation. Second, in
pursuing an organisation's goals, managers need accurate
information. The information management needs range across
financial, production, marketing, legal, and environmental
issues. Generally, the largest the organisation is, the greater
is management's need for information.
Managerial accounting is the process of identifying, measuring,
analysing, interpreting, and communicating information in
pursuit of an organisation's goals. Managerial accounting is an
integral part of the management process, and managerial
accountants are important strategic partners in an
organisation's management team. The management team seeks to
create value for the organisation, by managing resources,
activities, and people to achieve the organisation's goals
effectively. The day-to-day work of the management team
comprises four activities: decision making, planning, directing
operational activities and controlling.
Nowadays managerial accounting analysis is considered so
crucial in managing an enterprise that in most cases, far from
playing a passive role as information providers, managerial
accountants take a proactive role in both the strategic and
day-to-day decisions that confront an enterprise. Although much
of the information they provide is financial, there is a strong
trend toward the presentation of substantial non-financial data
as well. Actually, they supply all kinds of information to
management and act as strategic planners in support of
management's role in decision making and managing the
organisation activities.
Compared to financial accounting, managerial accounting is a
young discipline that focuses on the needs of managers within
the organisation, rather than interested parties outside the
organisation. As a result, managerial accounting concepts and
tools are still evolving as new ways are found to provide
information that assists management. Moreover, the business
environment is changing rapidly. For managerial accounting to
be as useful a tool in the future as it has been in the recent
past, managerial accounting has to be studied and improved.
In the 21st century the business environment is changing very
rapidly. These changes are reflected in global competition,
rapidly advancing technology, and improved communication
systems, such as the Internet. The activities that make an
enterprise successful today may no longer be sufficient next
year. A crucial role of managerial accounting is to continually
assess how an organisation stacks up against the competition,
with an eye towards continuously improving. In fact, moving
away from a historical cost accounting perspective and towards
a proactive cost management is the challenge that an enterprise
has to face. Assigning the costs to a larger number of cost
pools that better represent those activities that are
responsible for their birth, portrays the general idea upon
which future managerial accounting will evolve.
About The Author: Kadence Buchanan writes articles for
http://4educationinformation.com - In addition, Kadence also
writes articles for http://thegemstonecenter.com/ and
http://worldof-science.com/
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