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Managerial Accounting as a Decision Making Tool Discussion

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Accounting

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Managerial Accounting as a Decision-Making Tool

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September 2, 2020

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Managerial Accounting as a Decision-Making Tool

Managerial accounting is a crucial aspect of any business since it acts as a strategical

guide for the overall business. To achieve long-term and short-term goals of a company,

decisions need to be made and supported by relevant information. To this end, management

accountants prepare accounts, records, and internal financial reports. Management accountants

are tasked with simplifying complex financial data and present them as useful and actionable

insights used in decision-making.

Relevant costs analysis is essential in decision-making for the business. Through managerial

accounting, relevant existing expenses and future costs can be analyzed and determined (Ikram

& Ahmed, 2020). Management accountants decide how a company's budget should be spent.

Before any action is taken by the company, through management accountants, the company

evaluates all possibilities to determine the best approach to increase profits. Management

accountants, therefore, analyze different market activities, services, products, sales channels to

find a business model that is most profitable. After conducting relevant cost analysis, the

business can then make decisions based on the evidence presented by the management

accountants.

Management accountants also help in deciding whether a business would make its

products or buy them from a supplier or manufacturer. These are the two options in product

productions. Management accountants are, therefore tasked by the company to determine the

cost of each of the options (Ikram & Ahmed, 2020). Such a decision is very sensitive, and it

could determine whether the business is a success or failure.

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1 Managerial Accounting as a Decision-Making Tool Student's Name Institutional Affiliation September 2, 2020 2 Managerial Accounting as a Decision-Making Tool Managerial accounting is a crucial aspect of any business since it acts as a strategical guide for the overall business. To achieve long-term and short-term goals of a company, decisions need to be made and supported by relevant information. To this end, management accountants prepare accounts, records, and internal financial reports. Management accountants are tasked with simplifying complex financial data and present them as useful and actionable insights used in decision-making. Relevant costs analysis is essential in decision-making for the business. Through managerial accounting, relevant existing expenses and future costs can be analyzed and determined (Ikram & Ahmed, 2020). Management accountants decide how a company's budget should be spent. Before any action is taken by the company, through management accountants, the company evaluates all possibilities to determine the best approach to increase profits. Management accountants, therefore, analyze different market activities, services, products, sales channels to ...
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Tags: accounting Managerial accounting decision making tools Financial Data Financial Strategies