Managerial Accounting
Making business decisions based on financial information is a critical element of any organization and there are many forms of information that can be useful in that process.
Perhaps the most important and commonly used accounting tool for making business decisions would be financial statements. Financial statements include information regarding things such as revenue, assets and liabilities. Financial statements generally include the balance sheet, income statement and statement of cash flow.
Financial ratios are also an important tool that accountants use. Financial ratios provide a more detailed look into the elements of a company’s financial statements and can be used to create a series of indicators that can help predict the long range performance of the company. Once these indicators are in place, a company can begin the process of more accurately forecasting the various elements of the business such as sales, losses, growth potential etc.
A company’s managerial accountant can utilize a number of technological tools such as Quickbooks to streamline and to automate many typical accounting responsibilities and to communicate information to the entire organization.
By using a computerized accounting system instead of a manual use system, managerial accountants are able to: help reduce operating costs, better organize information, setup easy retrieval of the information, reduce the number of errors, increase the speed of processing the information, produce documents automatically, generate results based reports more easily, increase the speed of the entire process and make the communication process amongst all company channels more effective and efficient (AIU Online, MUSE).
References:
M.U.S.E. (2010). Managerial Accounting. Career Education Corporation. retrieved from AIU Virtual Campus.
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