Investment Decisions With Firm Strategy: Management Accounting - Literature review Example

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This paper describes how management accounting helps in identification of the most critical processes and related activities of the organization such that their cost allocations can be prioritized in the budgeting process. It is not easy to identify wastes in an organizational system…
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Investment Decisions With Firm Strategy: Management Accounting
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Download file to see previous pages Rom and Rohde (2007) explained how management accounting practices can help in analyzing the organizational processes by using integrated information systems such that the management accountants can have integrated view of the processes and their activities in the entire organization. As explained by Babad and Balachandran (1993), such integrated views of the organizational processes and related activities give an indication of the way money is spent in the organization by virtue of cost drivers. They explained how activity-based costing can provide deep visibility into the cost drivers of the organization thus bringing to surface the secrets of cash burn-outs which are practically impossible to detect in the accounting statements. The accounting statements present a consolidated picture of expenses under various heads but the drill down into those heads to detect every activity-based cost can be obtained by using this method. Such a method can provide deep information on the wastes that the organization might be incurred in the form of cost of those activities that do not contribute to the business effectively. Such activities can be detected by close analysis of mapping of organizational key performance indicators with the overall organizational goals. The balanced scorecard determines key performance indicators of processes of an organization with respect to four major determinants contributing to the vision and strategy of the organization – Financials, Customers, Internal Business Processes and Learning and Growth. ...Download file to see next pagesRead More
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