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TLE 9 accounting-information [How Managers use the Accounting Information]
Accounting provides crucial financial information to management for assessing profits, debts, and guiding business decisions effectively. It helps in identifying cash flow, managing budgets, and analyzing financial ratios to ensure business viability and inform strategies. Timely accounting data enables managers to address issues like decreasing sales or rising costs, aiding in the overall financial health of the company.
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TLE 9 accounting-information [How Managers use the Accounting Information]
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- 6. ACCOUNTING PROVIDES MANAGEMENTWITH DATA NEEDED TO DETERMINE WHETHER A BUSINESS IS AT A LOSS OR A PROFIT, HOW MUCH DEBTORS OWE, HOW MUCH A BUSINESS OWES OTHERS, AND OTHER FINANCIAL INFORMATION.
- 7. ACCOUNTING MEASURES BUSINESS TRANSACTIONSAND AS SUCH CAN HELP STEER MANAGERS IN THE RIGHT DIRECTION WITH SOLID INFORMATION, NOT GUT-FEELINGS. BASICALLY ACCOUNTING IS A TOOL FOR MANAGEMENT TO EMPLOY TO HELP MAKE SOUND BUSINESS DECISIONS ON A TIMELY MANNER.
- 8. FOR INSTANCE, IFBY USING ACCOUNTING INFORMATION, MANAGERS NOTICE THAT THE TREND IS FOR SALES TO DECREASE, THEN THEY CAN TAKE MEASURES TO STOP THIS TREND. MAYBE THEY NEED TO CHANGE PRICES OR DECREASE EXPENSES TO HANDLE THE DOWN-TREND.
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- 12. CASH IS THEMOST IMPORTANT BUSINESS ASSET. MANAGERS SHOULD USE ACCOUNTING INFORMATION TO SEE WHERE THE BUSINESS IS CASH-WISE AND TO PLAN FOR FINANCING AND OTHER STRATEGIES FOR SHORT-TERM AND LONG-TERM PLANNING.
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- 14. IF THE CASHBALANCE IS $50,000 AND THERE IS A NEED FOR A LARGE PURCHASE OF $120,000 FOR EQUIPMENT, A MANAGER MAY DECIDE TO FINANCE THE ENTIRE PURCHASE INSTEAD OF USING THE $50,000 BALANCE. MANY MANAGERS AND BUSINESS OWNERS USE RATIOS TO ANALYZE FINANCIAL DATA. FOR EXAMPLE CURRENT RATIO, A POPULAR WAY TO VERIFY HOW A BUSINESS IS ABLE TO MEET ITS SHORT-TERM DEBT, IS CALCULATED BY DIVIDING CURRENT ASSETS BY CURRENT LIABILITIES. THE HIGHER THIS RATIO, THE BETTER OFF A FIRM IS.
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- 17. WHICH IS ANESTIMATE OF INCOME AND EXPENSES FOR A CERTAIN POINT IN TIME. IT IS A GUIDE TO ENSURE THAT A BUSINESS IS ON TRACK, AS PLANNED. MANAGERS SHOULD BE AWARE OF BUDGET NUMBERS AND HOW THEY COMPARE TO ACTUAL NUMBERS.
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- 19. IF A POSTAGEEXPENSE NUMBER IS ALMOST OVER BUDGET, MANAGERS CAN RESEARCH THE REASON FOR THE EXCESSIVE EXPENSE IN THAT LINE ITEM AND MAKE DECISIONS ABOUT THAT. IF ACTUAL VERSUS BUDGET REPORTS SHOW A TREND TOWARDS MORE EXPENSIVE INVENTORY COSTS, THEN MANAGERS MAY CONSIDER RENEGOTIATING TERMS OR PRICES OR EVEN CHANGING SUPPLIERS.
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- 22. ACCOUNTING CAN HELPMANAGEMENT FIGURE OUT WHO OWES THE COMPANY MONEY AND FOR HOW LONG. AN "AGING RECEIVABLE REPORT," A USEFUL DETAILED ACCOUNTING REPORT, CAN BE USED BY MANAGERS TO IDENTIFY SLOW PAYING CLIENTS AND TO FOLLOW UP ON THEM, PREVENTING POSSIBLE LOSS OF INCOME.
- 23. CASH IS KING,ESPECIALLY WITH SMALL BUSINESSES, AND THE FASTER CUSTOMER PAYS, THE BETTER OFF THE FIRM IS TO MEET ITS FINANCIAL OBLIGATIONS.
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