Question

Please describe the role of accounting in business decision making. 500 words (Minimum)

Answer 1

The Role of accounting is to provide Information to Investors, creditors, management and stakeholders of the company in form of summarizes activity i.e. Financial statement.

Managerial accounting produced internal reporting of company that will used by managers to make design and make alteration and adopt strategy as per current working environment and policies those were not usually release to outsiders of the company.

Accounting data for decision making

Business required accurate data about assets, profit, liability and its stockholders. Accounts provide all this information at point of time in Balancesheet and need cash flow statement to manage cash flow for future project and decision return on investment though different approaches.

Using Accounting For preparation of budget:

Budget is an essential part to run business successful, Accounting uses the historical data to generate future budget and cost control, with all these information management will able to produce sales, purchase, overhead budget and create cash flow projection.

Then with regular accounting management try to make sure cost stay with as per budget.

Labor-employees are to be motivated for achieving expected performance. The management is to be aware of the financial position of the business for providing financial benefits. Accounting helps management by providing necessary information for taking proper decisions.

Accenting as per government rule and regulation:

Business must apply all rules and regulation while preparing financial statement an pay taxes on corporate income, social tax and sales.

Accounting make sure all that procedure accurately and save business to impose fine from government.

Ratios analysis as per financial statement

Money related proportions are essential measurements used to check the presentation of all parts of an organization's condition and tasks; bookkeeping gives the information required to develop these proportions. An organization's liquidity is estimated by the present and brisk proportions. Net revenues and costs are accounted for as rates of offers and contrasted with planned benchmarks. Monetary influence is a proportion of complete obligation to capital speculation.

Financial statement for investors.

Budgetary bookkeeping produces reports for outer clients, for example, proprietors, financial specialists, representatives, loan bosses, associations and government offices. These reports for outside use are the benefit and misfortune articulation, monetary record and income explanations. Not at all like inner administration bookkeeping reports, fiscal summaries arranged for outside clients are aggregated utilizing Generally Accepted Accounting Principles.

Money related bookkeeping reports whether the organization made a satisfactory benefit and that it is so prone to deliver profits to investors. Inquisitive speculators will look at the budget summaries to check the security of their ventures and potential for future development and increment in esteem. Representatives will take a gander at the announcements and get a thought of whether they can anticipate that raises or expanded commitments should benefits reserves.

Bookkeeping reports, both administrative and budgetary, are fundamental to beneficially deal with any organization or association. There is no substitute. Not having precise and auspicious data about how viably a business is running is a catastrophe waiting to happen.