See attached
Management Applications of Accounting DB II
• Your initial post should be at least 300 words in length.
• Your initial post should include at least one APA-formatted scholarly, professional, or textbook reference with accompanying in-text citation to support any paraphrased, summarized, or quoted material.
Post 2: Response post to a classmate is due by the end of day on Tuesday.
Post 3: Response post to a second classmate or the instructor’s follow-up question is due by the end of day on Tuesday.
• If no initial posts exist to allow for a response to be made, you may submit an additional initial post addressing another aspect of the unit topic.
• Feel free to post more responses to classmates as you read, reflect, and contribute to our discussion.
Do you think both types of accounting, financial and managerial—are necessary to make strategic business decisions? Why, or why not?
Reply 1 David Brogden
Successful businesses understand how both financial and managerial accounting work together. When it comes to financial accounting it is a little more straight forward for business operations. Financial accounting comprehends the financial information needed to analysis how a business is performing (Jacková, 179). Managerial accounting takes a similar approach but allows business managers to understand what direction their business should go and how they operate. Managerial accounting provides high quality information in relation to how much profit a business receives from the services or products they offer (Jacková, 179). Both are important in business operations.
One could view this as a homeowner deciding on how to improve their home. Before one undergoes a massive or short renovation, they must look at their finances to see how much they can afford to spend to get what they desire. Once their finances have been looked at the next item would be to look at contractors and decide what would be the best for their return on investment. Business managers examine how much profit they’ll be able to generate by purchasing what’s needed. They’ll examine the finances of the business to see how much is available and forecast what the item will do for their business.
Another reason why both work is they both work hand in hand with each other. When a business views their financial accounting, they’ll view how they been in the past and use that for a basis of their desired end state (Jacková, 179). Managerial accounting is viewed the same. This accounting method provides detailed information on financial records to understand how the business is operating (Jacková, 179). It is important for a business to understand how both accounting methods work for them. Using both allows a business to forecast revenue and a better strategic competitive advantage for their industry.
Reference
Jacková, A. (2024). The Impact of Management Accounting on Business Competitiveness. Ad Alta: Journal of Interdisciplinary Research, 14(2), 178–181.
Reply 2 Cina McDowell
Yes, it is necessary to have both financial and managerial accounting in place to assist in making strategic business decisions.
Starting with financial accounting it focuses on preparation of income statements, cash flow statements and balance sheets for divisions outside of the company such as investors, banks, creditors and stakeholders. Having transparency allows the company to meet compliance requirements as well as providing historical data. Having full understanding of their debt levels enables the company to use the balance sheet to further their borrowing ability prior to making a large purchase, additions or additional financial investments; it can also be useful in efforts to expand the company or seeking to purchase inventory. This information which can be gathered monthly or quarterly can be audited by a certified public accountant (CPA) to ensure accuracy and make strategic financial decisions.
Managerial accounting assists with internal planning providing more detailed information on costs and efficiency which allows them to make knowledgeable decisions of their operation such as production, pricing, etc. The information also enables the manager to compare products or departments to see how successful a product line may be versus another product. Having a greater understanding of product lines or departments enables managers to adjust department needs, promote products further or seek other products that may be more successful. Having a full understanding of the numbers will allow one to adjust goals as needed and help with everyday operations.
It is important to not rely on just one method, but to have as much information to have a solid company financial report. This transparent information which is both internal (managerial) and external (financial) will assist a company to be successful and long lasting. Information that is transparent can also improve future decisions, increased trust and reduced economic frictions. There can be a cost to transparency as well such as misuse of information and scrutiny (Bischof, et al., 2024).
Bischof, J., Gassen, J., Rohlfing-Bastian, A., Rostam-Afschar, D., & Sureth-Sloane, C. (2024).
Accounting for Transparency: a Framework and Three Applications in Tax, Managerial, and Financial Accounting.
Schmalenbach Journal of Business Research (SBUR),
76(4), 573–611.
