Question

How do management accounts affect strategic decisions?

Answer 1

Managerial accounting is the process of identifying, measuring, analyzing, interpreting and communicating information for the pursuit of an organization’s goals. Small business owners are faced with countless decisions every business day. Managerial accounting information provides data-driven input to these decisions, which can improve decision making over the long term.The main concepts of managerial accounting which bring it this importance as decision-making tool are Planning which includes budgets, controlling which helps in monitoring the performance, and decision making.

Managerial accounting helps in decision making by showing where and when money has spent, by evaluating performance, and by showing the implication of choosing one plan instead of another. Fundamental relationships in the decision-making process are from event to accounts analysis and recording and then financial statements to users. It provides quantitate information about economic conditions and evaluates all the related factors in determined approach. It is used by not only management department but also useful for other stakeholders to come up with effective.

Strategic decisions are non quantitative in nature. Strategic decisions are based on the subjective thinking of management concerning goals and objectives.Management Accountants use variety to tools and plans to aid in strategic decision making. They focus on major deliverables such as revenue growth, productivity growth and efficient asset utilisation. This further trickles down to other internal as well as external aspects such as Customer Management, Internal Operations, Public relations as well as Human resource management.Management Accountants use variety to tools and plans to aid instrategic decision making. They focus on major deliverables such as revenue growth, productivity growth and efficient asset utilisation.