Thursday, 20 December 2018

The application of management accounting in decision making

management accounting

Introduction to management accounting 

Management accounting is the presentation of analysis of business activities to the internal management to facilitate decision making. in carrying out its activities, the company always faced various problems. Among them are how so that the company can operate as efficiently as possible, so that it can be trust the maximum profit. To face these problems, needed an adequate internal reporting system, so that in case of misappropriation or waste in the production process can soon be overcome.

In the internal reporting system is needed in accounting management. Management accounting is the systematic liaison network in the presentation of useful information and resources to help can the leadership of the company in an effort to achieve the goals that have been set previously.

Information management accounting consists of full cost accounting information (full cost accounting), accounting information deferential (differential accounting), accounting and accountability (responsibility accounting).

Management associate

If the accounting information management associate wave object information. Such as the product of the company departments and activities. It will be a full accounting information generate. Management accounting information is associate with the alternative to be choose. It will be generate the concept of differential accounting information. Which is urgently need by management for the purposes of decision making the election a number of alternatives.

The accounting information communicate management with the authority. That belongs to the Manager, it will be generate the concept of accountability. Which accountancy information especially useful to influence human behavior in organizations.

Making decisions about the selection of a number of alternatives on differential accounting can be group into two namely:

The decision of long-term and short-term decisions. Long-term decision is the decision take. Whereby managers are a result of those decisions can provide benefits for more than one year. Alternative to consider in long-term decision making, among others, namely; buy or rent a machine, bought in cash or in installments, and others.

Short term decision

The short-term Decision is the decision takes. Whereby managers are a result of the decision can be directly felt in the year in which the decision was taken. Alternative that should be consider in the short term decision making among others, namely; If the order is under the cost of goods was accepted or rejected, sell now or further processing of certain products.

Understanding Accounting Management

Accounting has a very important role in the business world, ranging from small businesses who do not seek profit up on large corporate profiteers need information accounting is used as a planning tool, surveillance or as a basis for decision making. Seen from an understanding of accounting itself has many definitions as long as it is known.

This is because of the breadth of the scope of the activities of accounting as a result between the definitions one with other definitions there are differences of emphasis. However, the definitions/accounting definition understanding has given that emphasizes accounting functions as a source of information.

Accounting function

In the point of view of the aspects of the information accounting can be define as follows:

"accounting is the activity that generates the service i.e. quantitative information function. Which basically financial nature of a business unit or a specific organization. Such information will be use by external parties as well as internal party for decision making by choosing some alternatives ".

The above definition describes the accounting function as a source of financial information require. By the external party to decision-making, and financial information are use by internal party for decision making in the selection of alternatives.

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