The Role Of Accounting Information In The Management Decision Making?


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Benedict Buchanan Profile
Accounting information serves two main purposes, one is to be able to look back and 'account' for what happened, the other is to then use this information over time to look for trends to be able to better manage a company or project in the future. Hence the reason it is good to keep track of finances on small projects as well as for a company as a whole. If you ever saw a spreadsheet of a very advanced company like Thomson Legal and Regulatory Group you will understand how deep the analysis can be. They are able to plan ahead with extreme accuracy because they saw so many instances of past projects and past budgets that they can use such fine-grain information to predict with high accuracy what will happen in upcoming projects. At first it might look just like numbers, but when put into graphs, when a very good person is in charge of the information and the projections over a long time, the amount of information they can work out about the future from past years or from similar past companies or projects is considerable. Really one is looking for important turning points and key indicators. Balancing money, time, skill, quality and use of resources is the key. More time can mean more time to do training and hence higher quality, but more time might also mean employee expenses are relatively higher so product prices would also have to be higher. Time, Quality and Price you can only ever compete on two of these, never all three. The attached picture can help students struggling to understand what use accounting data is to managers... 'time' and 'timing' is the key. 'When to do things'... When to spend, when to stop spending, when to grow, when to stay steady, when to shrink... All things go through this cycle.

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