Role of Managerial Accounting as Decision Making Tool in Your Organization Discussion
- January 15, 2022/ Management
Question: Discuss the importance of managerial accounting as “decision-making tool” in your organization.
POST 1:Managerial accounting is the one that can be more utilized for raising the operating efficiency of the organization. Managers that are existing in the organization are taking more support from the managerial accounting to raise the financial conditions of the organization. As managers are more responsible for making long and also short term decisions this managerial accounting will be more supportive. Decisions which are taken related to the investments can also be taken more effectively with the help of the managerial accounting. All the reports that are regarding the business insights can be given by managerial accounting so that this can enable the managers can get all the data for making effective decisions (Burton, 2017). Daily managers in small businesses will be making continuous decisions. This managerial accounting is considered as one of the most powerful tools by the managers for getting huge profits and also for gaining more competitive advantage. At any particular time, the process of decision-making can be well improved more effectively by making use of this tool. The term decision-making can be termed as choosing a course of action from a group of alternatives.
If there are no other choices then there is no necessity for making decisions and depending on the data that is providing by managerial accounts managers in the company will make decisions regarding the products that are to be sold (Nelken et al., 2017). For a clear understanding of the efforts that are to be put for marketing can also be known clearly by managerial accounting. There is also one of the software and that can be more helpful for the evaluation of finance. The team that is formed in the company will also make insights depending on the accounts of the management. All the data that is related to finance can be known by management accounting. All the decisions that are regarding fixing prices for the products and about the factors of marketing can be acquired from the management accounting (Zarzycka et al., 2017). Owners for the business are also having more flexibility in making the decisions by taking more support from the managerial accounting.
POST 2: The managerial accounting system has become an important element in the organization. It is not used in the financial aspects but also to understand the organizational financial structure and the strategic approaches made to reach them. And in the decision-making element also it has huge participation. It helps to know the present factors which are related to the organization and also future problems. This helps to take the fast and valid decisions accurately and up to date information will be provided. By using this the company gets accurate information and it results in reducing the errors made by employees. Which in turn results in taking the best decisions suitable for the organization (Lin, 2019).
This will help in taking effective decision making which gives productivity in capital budgeting and also it will be useful in financial elements like costing, financial analysis, capital budgeting, ratio analysis, etc. Without the information provided by managerial accounting, it is hard to make decisions, and by evaluating them in alternate ways. this helps to know about the financial data like when, where, and how it is used regarding the capital budgeting. By this, the organizational management can understand its budget structure and take further decisions. By checking these net present value and capital budgeting the managers can take the decision related to future projects (Bhimani, 2018).
This involves numerous processes which like reviewing and deciding about the products because we don’t know whether the product is having the demand or not. So by going through this managerial accounting, the management will be able to decide on purchasing the products. These present the information in the way that the organizations can take decisions about the operations properly. By updating all the financial records on date will helps to evaluate the financial elements and take further steps. By knowing about the financial data and about the revenues generated from the different alternatives it is easy to analyze and makes the decisions very easier (Minglei Li, 2016).
POST 3: Management Accounting as it sounds is a part of Accounting that helps the Management of a company to make decisions. This helps the management to make better decisions that can be justifiable. Management Accounting also helps a company in Planning, Controlling and Analyzing. To be more precise, decisions are made by the Management when they have most current and accurate data. Management Accounting enables the management to make decisions, planning, controlling and analyzing by providing the information that is needed to make decisions (Mihăilă, 2014).
The data or statements provided by the Accounting Professionals are not necessarily easily understandable to the management because of which Management Accounting has been developed. She further adds that the Management Accounting records both financial and non-financial information based on the business needs of a company or an organization to monitor the income sources and losses by developing reports for analysis and dashboards for the management with all the incoming and outgoing of funds in the form of costs and revenues, liabilities and debts, disbursements and receipts, etc. that helps a company to know its funding needs and sources of business (Mihăilă, 2014).
Additionally, when we review the slides in Moodle, under Narrated Lecture notes, Management Accounting of Module 1, here we also learn that the perspectives beyond merely the numbers of the Management Accounting includes the Ethics, Strategic Management, Enterprise Risk Management, Corporate Social Responsibility, Process Management and the Leadership Perspective (Marius, Denisa & Florina, 2012).
Ethical Perspectives include Competence, Confidentiality, Integrity and Credibility.
Strategic Management Perspectives includes Customer intimacy, Operational Excellence and Product Leadership Strategies.
Corporate Social Responsibility Perspectives include the consideration of the needs of a company’s stakeholders that includes Customers, Employees, Suppliers, Communities, Stockholder, Environmental and Human Rights Advocates, etc.
Process Management Perspectives is a process wherein the continuation of tasks or a series of chain is maintained to run the business smoothly that includes the R&D, Product Design, Manufacturing, Marketing, Distribution, Customer Services to add value to the chain.