This paper will look how the Guillermo Furniture Store could use financial statements and performance reports in making decisions for the company. Ethics and how accounting can influence the decision making process will be discussed. Finally, this paper will consider what accounting information is most significant for Guillermo in making decisions to help the company-overcome challenges that it faces.
Budgets and performance reports
In the Guillermo Furniture Store Scenario, Guillermo the owner is faced with the effect of the economic market growing, global competition, and the use of today’s technology in manufacturing the identical class of excellence in furniture and trying to keep the furniture reasonably priced (University of Phoenix, 2010).
Guillermo could use budget and performance reports to assist in managing and putting into practice accounting plans. The Guillermo Furniture Store should use budgets because they are the most important plans for ensuring that management is using the proper methods of teaching and enforcing acceptable patterns of behavior. If the company does not have a budget, their planning possibly will not obtain the principle spotlight that it typically should have (Horngren, 2008). All of the collected facts and data that is incorporated in a financial statement or income statement will show management how the operating expenses and cash flow is going through a monthly or quarterly report. The Guillermo Furniture Store could use the budgets to help Guillermo in making up his mind regarding staying in business or looking at other options. Guillermo could use the collected facts and data to estimate the monetary value of a profit on money that has been invested as well as earnings by value paid for the business. Guillermo could use budget reports from prior year’s to achieve an breakdown that will help with the companies determination to perhaps reduce expenses or locate favorable...