Decision-making in business refers to the techniques and skills applied in making a sound decision, pertaining to the running of business activities. On the basis of this statement, ‘business management accounting’ refers to the directions that businesses take to correct a situation of financial crisis or shortcomings.
These decisions that businesses make, enhance the achievement of the set goals and objectives both in the long and the short run. In most businesses, decision-makers are the business managers and other credible individuals in the running of the business. Decision-makers in a business enterprise are very powerful, which makes them responsible and accountable for their actions. It should be clearly noted that there is a very strong positive correlation between the decisions made in the business and its prosperity. (Garrison and Brewer, 2009)
This research paper will therefore give a detailed survey of the duties placed on business management accountants which makes them very powerful; being responsible and accountable for their actions. The research is mainly meant to establish a relationship between decision-making and the success of a business enterprise.
Business management accountants are decision-makers that are very powerful in the sense that; they are held to a position of taking the best action among various choices, concerning the utilization of the limited financial resources available in the business enterprise. Basically, accountants are entrusted with a very great power to decide on the best course to which the business is to be steered. (Ormiston and Fraser, 2009)
Decision-making is a very critical process that determines the best course at which the business is meant to take, so as to enhance prosperity in the business enterprise. In this respect, therefore, business decision-makers are entrusted with a very powerful authority of determining the fate of a business. For instance, the accountant is required to apply relevant accounting management tools in decision-making.
For instance, management accounting in the World Bank today has been entrusted with a very critical role of deciding on how much each developing country can borrow; during financially critical situations. The management accountants in this global financial institution are required to set up correct drawing reserves; for each developing country based on their levels of development. (Ormiston and Fraser, 2009)
A business decision responsibility refers to the roles business managers are meant to accomplish. In accounting, business management responsibilities are more based on financial resources than in the other capital tangible resources like premises and machinery. (Bosanko and Braeutigam, 2007)
For example, in the ‘Standard Chartered Bank’ today, the chief financial accountant is entitled to the responsibility of governing all the financial transactions that take place within the bank. The accountant is also entrusted with the responsibility of managing the accounts and ensuring that all the entries in the transactions are correct. (Bosanko and Braeutigam, 2007)
Generally in management accounting, responsibilities are more of financial transactions and entail the application of accounting techniques; to determine the viability of various options at hand before making a decision. It has been revealed that most accountants employ various accounting techniques in ensuring a balance between the business receipts and payments. (Bosanko and Braeutigam, 2007)
Accountability in decision-making refers to the ability to take charge of one’s self actions. In management accounting, decision-makers are meant to be original and unique in the sense that they should be able to make explanations; as to why they take an option and neglect another in solving a problem. (Libby, Libby, and Short, 2008)
Accountability in management accounting is a very crucial tool for effective decision making; just because the accountants will be held responsible for any financial decisions that are made within the business enterprise. The decisions that these accountants will make will give some light to the entire managerial system; while at the same time reflecting the success or the failure of the business enterprise. (Libby, Libby, and Short, 2008)
Accounting skills are of crucial importance in ensuring that, the accountants take the right course in steering the business towards achieving its laid goals and objectives. After evaluating various options to solve a certain crisis and analyzing each option; the manager chooses the option that seems to be less risky, and that will enhance the achievement of the goal and objectives most effectively. (Ormiston and Fraser, 2009)
For example, the ‘Toyota Motors Corporation’ accountants are responsible for ensuring that all the motor vehicle transactions are well managed, and should be responsible for all the total volume of sales for automobiles. Based on this, such accountants at a point remain accountable for the transactions that take place within the company. (Libby, Libby, and Short, 2008)
From the research, it has been revealed that management accounting involves various techniques and skills, which validate the managerial activities in the business. More precisely, accountants should ensure that they are responsible and accountable for their actions as they are very powerful individuals in decision-making. The esteem with which management accountants are held upon, leaves them with the ability to decide on the best of options to choose from.
Reference list
Bosanko D. and Braeutigam R., (2007). Microeconomics (3rd Edition). New York: Wiley Publishers.
Garrison J., Noreen E. and Brewer P., (2009). Managerial Accounting: 13 edition. New York: McGraw-Hill/Irwin Press.
Libby R., Libby P. and Short D., (2008). Study Guide to Accompany Financial Accounting 6th Revised edition. New York: McGraw Hill Higher Education Press.
Ormiston A. and Fraser L., (2009). Understanding Financial Statements (9th Edition). London: Prentice Hall Press.