AN ASSESSMENT INTO THE MANAGEMENT OF ACCOUNTING METHODS AS A TOOL FOR DECISION MAKING IN AN ORGANIZATION
- Project Research
- 1-5 Chapters
- Quantitative
- Chi-Square
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 3000
BACKGROUND OF STUDY
Planning, organizing, staffing, directing, and managing are just a few of the tasks performed by an organization as part of its management process. According to Brech (2020), the best definition of management for everyday use is as follows: A social process that involves accountability for the efficiency, financial planning, and rules governing how a company operates in order to accomplish a certain goal or job. These duties include applying judgment and decision-making when making plans, using data to monitor performance and progress in relation to plans, and directing, integrating, motivating, and overseeing the staff members that make up the organization and carry out its operations.
The term "management accounting" refers to the portion of the management process that is concerned with enhancing the value of businesses by ensuring that resources are employed by people in competitive and dynamic environments. It is a crucial step in the management process that notably provides value by regularly examining how well individuals and organizations are using resources to benefit customers, shareholders, and other stakeholders (Adelegan, 2019). No firm can operate successfully and meet its goals without using management accounting procedures (Adeniji, 2015). Additionally, since management accounting procedures serve as a sufficient guide for decision making at all levels, its decision-making will not be directed. Assisting all levels of management in planning and directing the operations of a corporate company, management accounting is the application of accounting knowledge, methods, and abilities to the supply of information.
Measurement and adjustment of subordinate activity performance is a management job that ensures that the goals and objectives developed for the firm are being carried out. Thus, it should come as no surprise that many manufacturing firms, especially large-scale ones, are becoming increasingly interested in using management accounting practices. Accounting information is used in management accounting to provide the management team with knowledge that will aid in decision-making. As a result, making decisions becomes more of a calculated procedure than an educated guess. The reporting problems or compliance needs are not the emphasis of management accounting, which is internally oriented. As was said above, "No firm can prosper in its operations and achieve its specified goals without the implementation of management accounting approaches. Additionally, its decision-making will not be directed since management accounting procedures provide sufficient guidance to management decision-making at all levels; rather, the goal is to highlight any flaws and mistakes (if any) so that they may be fixed and prevented from happening again. Therefore, it is the responsibility of every business to guarantee the correctness, thoroughness, and dependability of accounting records, and from the management's perspective, this is the most crucial control measure. Effective management accounting techniques must be in place for an enterprise to follow through on its plans. They will aid the organization in maintaining the financial and other controls established by the management to conduct business in an orderly and efficient manner, ensure adherence to management policies, protect assets, and promote operational efficiency of all aspects of the company's activities.
Additionally, each organization, whether public or private, has goals. The effectiveness with which the resources provided to the organization were used for the intended purpose will determine if these goals are achieved. Additionally, the management of the organization's access to information determines how these resources are deployed to the agreed-upon suitable areas. Segments and the whole organization may benefit from the useful information provided by management accounting. According to Aku (2021), there is a distinct difference between accounting generally and management accounting in particular. Accounting generally is concerned with reporting the entity's performance at regular intervals, while management accounting is concerned with providing management information for the benefit of the enterprise. However, due to the unqualified nature of their accounting staff, the use of management accounting techniques in manufacturing companies is still not fully implemented and put into use. This is said to be one of the major reasons why many manufacturing companies do not stay long in the market, especially in a country like Nigeria.
In addition, management accounting's main focus is on acquiring data, evaluating it, processing it, interpreting it, and conveying the information it yields for use inside the company so that management can better plan, make decisions, and manage operations. The supply of management information is the focus of management accounting, while management accounting methods focus on the practices in management accounting that management should adopt to support management decision making. Lucy (2018) asserts that "management accounting procedures is a system which is developed to fit the way commodities are processed, manufactured, or provided services." The methods that an organization will use will depend on the goals that it wishes to achieve. Marginal costing, absorption costing, standard costing, real costing ascertainment, variance accounting, budgetary control, differential costing, and capital budgeting are some of the approaches used in management accounting.
Additionally, managerial accounting includes methods and procedures that are designed to provide employees of an organization access to financial and non-financial data so they may make better choices, improve organizational performance, and attain organizational control (Paul, 2018). Planning, controlling, decision-making, and performance evaluation are all part of management accounting's broad range of applications. The aforementioned definition of management accounting makes it clear that management accounting is crucial to an organization's decision-making process. The process of decision-making runs continuously across all organizational operations. Every day, managers make choices in many types of organizations, including those in business, healthcare, government, and education. To some degree, our comprehension of what characterizes an organization as successful relies on our understanding of how individuals make wise judgments (in which management accounting intends to provide such knowledge). A decision is described as a deliberate selection among potential actions, followed by actions to carry out the selection. A decision-making process is a set of connected processes that result in an action, a result, and an evaluation. No management task can be carried out without it since decision-making is so fundamental to it. Plans, organizations, actions, and controls all need judgments for management objectives.
In conclusion, management accounting procedures are crucial to a business since they lessen the reasons why some actions are unproductive, inefficient, or unprofitable. Effective management accounting strategies for making decisions often include a four-phase process that involves creating standards, evaluating performance against those standards, providing feedback on the results, and addressing deviations from the standards. Given the above, the goal of this research project is to evaluate the usefulness and practicality of management accounting procedures for decision making as they have been devised and used inside the Plastic Footwear Industry Limited, Port Harcourt.
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