Accounting: A Tool for Decision Making
by Pankaj Kumar |April 29, 2019
Accounting is said to be foundation for the managerial decision making. It allows the management to keep the track record of every single transaction from its posting to last, and where it will effect which financial statements at the end of the time period. The growth and expansion of the firm is wholly hingeing on the accounting process and its end results.
Mainly for the small scale business their dependence is very high on the financials of accounting. They also want to diversify their market and business firm. It is crucial for them to follow up their firm policies and procedures. Growth is a dream for any owner of the firm. But the growth must be holistic and can be in every aspect of the business. It is very necessary that the accounts must insight the accurate and reliable picture of the firm so that the decisions made from the accounting should not suffer from any kind of biasness.
In the accounting and bookkeeping outsourcing fields, the business firm delegates their accounting process to offshore outsource companies. The accuracy depends upon the accounts prepared by outsourcing firms. Outsourcing companies usually make accounting procedure easy and resultingly, output is highly relaiable and accurate. Exactness can be met with the help of automation and it is involoed in assistance of several accounting softwares like QuickBooks , Xero, MYOB, Netsuite, and so on,. This ensures the properly managed and accessed data transform into the financial statement and final reports.
In the accounting field, the decision making wholly depends on the accounts that are made by the outsourcing partner of the firm. And it is very necessary that the accountants employed by the outsourcing company must have specialized skills and expertise in accounting principles and standards.
When these final reports reached to management of the firm, they are liable to make future forecast on the basis of present performance of the company. To go with the flow in market, it is very necessary that genuine forecasting is done regarding operating the business in the future.
There are several aspects in the organization which will be beneficial with composing the accurate and reliable accounts. The decision making can be done on these aspects with the help of accounting. The following are some concerns of business in which the accounting is helpful in their decision making:
Budgeting: It will always be beneficial for if you set a fixed budget for every single activity in the business. This will leads to the prior estimation and preparing for the same. As for the expenses, when you set the fixed budget you will be aware that your expenses will not exceed further from this limit.
Cost Estimation: Profit and Loss Account will deliver you clear picture of your expenses and income incurred by your business firm in the previous period. And on the basis of this, you can view the estimation for the future, that how much loss or profit is to be delivier to your entity in the future time period.
Financing Decisions: Every business requires finance at some point in the business. Finance is regarded as life- blood for any organization. The end of financial process i.e financial reports are beneficial in deciding the best finance options suitable for the business firm.
Investment Decisions: It is vital for any business firm to make investment in investment institutions or the securities for earning return on them. There are diverse alternatives available for investing money and they have to choose the best out of them. The past records are helpful in deciding the profitable mode for the firm.
Allocation of Resources: The financial reports help the business firms to allocate the existing resources in the meticulous way, in which the maximum output can be archived from them. It ensures the optimum utilization of the existing resources. Resources can be: cash, employees, assets or any other which will helpful in better functioning of the business.
Better Planning and Controlling: Variance analysis is helpful in comparing the past and present performance with the estimated or budgeted figures. The lack in action plan can be placed with naked eyes. And enriched planning and controlling measures can be taken for the future concern.
Forecasting: It is the way of thinking ahead for the future about the business activities, taking into consideration the existing performance of the company. Management can predict the future expenses or revenues on the estimation basis.
Globalbookkeeping.net will make your search complete in finding a suitable accounting and bookkeeping outsourcing partner for your firm, which will help you not only in maintain your accounts also in better decision making regarding every single aspect of your firm. We can help you to grow potentially. We have been using the QuickBooks Accounting Software from last 8 and more years.
We have a team of highly qualified professionals of accountancy. We have the lowest operation costs for all our services and we take pride in that. We here only for the purpose of providing you the benefit of managing your funds, that will help you in staying in profit for the longer time.
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