Understanding how accounting helps facilitate corporate decision-making

finance textbook

Accounting is field responsible for studying, measuring and analyzing the economic and financial situation of a company or organization in order to facilitate decision-making at the heart of their own and external control, presenting the information previously recorded, systematically useful manner for different stakeholders.

It It involves the analysis from different sectors of all variables that affect this field. For this, it is necessary to carry out a systematic and chronological record of financial transactions.

The techniques used help summarize business operations in order to interpret their results .

Consequently, managers or directors may draw information on the course they follow their business through accounting and statistical data.

The data provides insight into the stability and solvency of the company: current receipts, payments, sales trends, costs and overheads, among others. So they can know the financial capacity of the company.

The purpose of accounting is to provide information at a given time of the results obtained over a period of time, which is useful for decision making, both for past management control, as for estimates of future results, giving such decisions rationally and eficiently.

Nature of accounting

Science: Accounting does not entail an assumption of relevant facts, on the contrary, it analyzes each and all facts based on acquired knowledge. It is a systematic knowledge, verifiable and fallible.

It is forged through the formulation of hypotheses, construction of sets of logical ideas (theories) that can predict and explain phenomena relating to its subject matter. In order to identify phenomena or events that provide great information for best performance .

Technique: Because it works based on a set of procedures or systems to collect, process and report useful information concerning assets.

It is a series of steps to accomplish a task and the task is accounting registration, bookkeeping.

These definitions of accounting, with their high levels of scientific and technological components, have characterized this field in the last hundred years.

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