The wake of the 21st century brings with it more challenges than the long awaited relief amidst the corporate world. Even with the improvement and introduction of cutting edge technology, management issues still remain a hassle even with the best tools and the best brains in the trade. Problems and issues pertaining to management are very sensitive especially when it comes to managing a company’s finances. The waxing and waning of the world economy makes this process even harder as more and more companies are forced to hire the services of skilled analysts at high cost all the while speculating the outcomes of the economy. However, with the right tools information and skills, a company is guaranteed to stay afloat in a world where businesses keep dropping out of the corporate world. How companies manage their finances and workforce dictates whether the company is bound to open its doors come the next financial year.
One of the major concerns in management is the management of accounts which is usually handled a company’s accountants in conjunction with the management of the company. Management accounting specifically deals with generating information pertaining to a given company and basically relates on how to minimize costs while improving sales and boosting profits within the available company’s resources. In short this is information that helps the management to make crucial decisions. Financial accounting on the other hand deals with generating information based on information relayed by external users and mainly deals with control of cash inflow and outflow in the company. So why is management accounting so important? Among the most important reasons why management accounting is important to company include;
1) Planning-this basically deals with making decisions pertaining to the company’s products where and when to make them, who to sell them to, how much labor it will use and so on and so forth (Caplan, 5).
Cited: Accounting Coach. Standard Costing. Retrieved at; http://www.accountingcoach.com/online- accounting-course/30Xpg05.html. Caplan, Dennis. “Management Accounting Concepts and Techniques.” Management Accounting, 2010. Print. Fundamental Finance. Variable Costs and Fixed Costs. Retrieved at; http://economics.fundamentalfinance.com/micro_costs.php. More Business. Build the Business of Your Dreams: Fixed and Variable Cost Control: Effective Cost Cutting Strategies. Retrieved at; http://www.morebusiness.com/running_your_business/profitability/Controlling-Costs.brc.