Accounting homework help
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this assignment is very important please do your best.
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MLA
1000 word to 1200
this assignment is very important please do your best.
the screen shot is your guidance for the essay
MLA
1000 word to 1200
- The importance of accounting relatively to decision making
The importance of accounting in society plays a major role in making decisions as the
information provided from accounting department allows managers to conduct a higher quality
in making decisions. Accounting information helps managers to understand company’s
positioning at one point in time. Especially with the current financial crisis as managers needs to
have an extensive information to be able to plan and develop strategies that can adapt the
economic situation which we live in for its survival. Accountants have the ability to influence
management decision with their information provided to the organization by using qualitative
and quantitive techniques. Accounting is beyond scorekeeping and financial reports as the
information provided has to have a context of quality by evaluating and analyzing organization
data and performance. Accountant role after implementing the scorekeeping function is also to
embrace the opportunities and problems that senior managers need to pay attention, and clarify
the best decision available that helps the organization to reach their primary goal.
Historically, business owners were mostly interested in measuring the price of outputs relatively
to the cost of inputs. However, in recent years, accounting has been a controversy for academic
who are seeking to develop an efficient management system. The controversy was on whether
accounting management is relevant to the decision-making, and is accounting management
practices realistic enough to be reliable? Especially in time with new innovations and technology.
Gary M. Entwistle and Fred phillips (2003, PP 81) argue that one of the flaws facing
accounting is the framework of collecting information which is free from error and bias, got
accounting into be less reliable as accounting has not yet been able to measure intangible assets.
Such as brands, patents, and investment in human capital are extremely difficult to evaluate
because measuring these unphysical assets can be bias. Apple, a technological manufacturing
company ranked as the most valuable brand in the world, is valued roughly $241.2B in 2019
( Forbes, 2020). Apple’s brand value is growing dramatically because of the consistency of their
development and the uniqueness of their product. As a result, Apple has gained investors and
costumers trust and loyalty that considered to be an intangible asset. In addition, Apple intend to
invest over $16 billion on research and development in 2019( CNBC, 2019). As this investment
considered to be an expense to the company in accounting perspective. However, some critics
believe that R&D is a future economic benefit that should be included to the balance sheet as I
quote from Robert S. Kaplan and Johnson (1987, PP 22) explains that “The financial system
treats many cash outlays as expense of the period in which they are made even though these
outlays will benefit future period.” These critics appeared because the quick dramatic changes in
behavior from the old traditional manufacturing to the new modern manufacturing economy
resulted a gap between real world valuation and accounting quantitive practice which has raised
the debate between whether accounting is practical or not.
Furthermore, Critics refer to accounting management information as basic, broad, and takes time
until managers can be able to act based on the information. Kaplan and Johnson (1987, p. 22)
states that “management accounting is produced too late, too aggregated, and too distorted to be
relevant for managers’ planning and control decision.” Traditionally, Accountant uses simple
cost system that is not helpful for management to evaluate each product line performance.
Traditional costing system sums up all the actives instead of allocating the actual expense which
makes managers job much harder to improve each product line and eliminate any extra expenses
by reason of its simplicity. Therefore, Accounting needed a new method of allocating costs that
can clear managers vision on the actual expense for each line which was the Activity based
costing developed by Cooper and Kaplan. ABC system revolutionized accounting management
into be more effective tool for decision-making. ABC system provide management with the
extensive data that guid management to pay attention on the resources consumed by each product
line. It is more accurate and reliable than simple costing system. The benefits of using ABC
system draws managers attention to any neglected aspects in the organization as it enhance
managers quality of making-decision.
A second method improves decision making is cost of quality. Cost of quality helps to
assure better quality performance in every activity. It helps to improve productivity as well as
reduction in waste. organizations use COQ to increase their competitive advantage. COQ
provides managers an analyzed data which is relevant to the decision-making of developing
process.
On the other hand , the information provided from the accounting department is incomplete
as the information context is required to have a full picture before making decision. The
importance of knowing and understanding the challenges faces an organization is crucial to have
an effective decisions making, as simple relevant cost system is incomplete and inconsistent with
the organization’s strategic goals ( Blocher, 2009). A real world example is the firm that I work
for, have a temporary limited production due to some maintenance as the company faces a high
demand over firm’s capacity of production. The firm has two product line activity bag Cement
and bulk cement as bag cement has 15% over cost than bulk cement because of the packing
process, electricity and material cost ( paper bag ). Because of the high demand, the company
needs to reduce one of the product sales. Obviously, bulk cement is much profitable using
accounting quantitive perspective. In contrast, the sales department states that the market share
of bag cement is stable and growth steadily, as decreasing company’s sales for bag cement might
result a bad reputation for the company which will result difficulty in rebuilding business
reputation and regaining our market share. Although, bulk sales is much profitable and generate
less cost, bulk sales fluctuate from week to another which also depends on credit sales. Our bulk
costumers can understand our temporary issue as we have been their suppliers ages ago. The
accounting department and sales department are still discussing on the temporary issue as well as
the financial department who is concerned in the cash flow matter. This issue shows the
importance of qualitative and quantitive perspective to have a complete ground in making better
management decision.
conclusion