managerial accounting

Managerial Accounting

2005

Managerial Accounting

1 . Describe the role that an understanding of cost behavior patterns can play in supporting effective resource management and enhancing shareholder value

The role of the accountant in the organization has increased dramatically since the time of introduction of cost accounting Understanding of cost behavior patterns can play a significant role in supporting effective resource management and enhancing shareholder value . The importance of cost accounting in the work of the company is very high because it provides a basis for the senior-management 's

strategic decisions . At present , management accountants prepare detailed financial plans for future operations of the companies , measure the efficiency of different projects which the company is considering suggest ways to improve the organization 's activity , and to solve numerous problems which the organization is facing . They do not play the role of ordinary assistants but carry out decisions influencing the activity of the company . Cost accountants also play a primary role in designing information systems for the companies . The efficient accounting system with correct objectives in the company is the key to the company 's success

According to Horngren , C .T , G . Foster and S . M . Datar (2000 , companies need to ensure cost analysis is conducted on the highest level in to be able to balance costs with revenues . If historically , businesses used to turn to cash flow accounting (which can also be called general fund accounting ) in to estimate the flow of current financial resources , with the introduction of cost analysis they completely neglected the old practice . Cost accounting concepts and practices have made companies realize that in the present world of rapid changes , a business cannot function efficiently without having highly professional cost accounting managers . The success of every company is related to many issues , and it is a very complex result of many employees ' efforts It is impossible to form an impression that one division of the company can serve as the most important in the company 's success and increase shareholders ' value , because the success requires joint efforts However , one of the building blocks of this process is always connected with the application of principles and practices of cost accounting

Without having this system functioning efficiently in the organization there is no way to hope for correctly made management decisions . No matter how big or small the company is , it requires specialists in cost accounting of a very high level . Many strategic decisions in companies are based on the results of cost accounting in the organizations

According to Zerbe , Diveley (1997 , the main reasons of the cost accounting development are connected with the growing complexity of companies , and growing of their needs . In the time when goods and services were provided by individual producers , elaborate accounting records were not necessary due to the simplicity of the process in general . However , in some time the environment for accounting has grown more complicated , and need in detailed cost accounting , able to provide all the necessary assistance to the...