For effective and timely decision, an organisation requires quality information, both external an internal. Accounting information is of importance in decision making at different levels. Accounting information offers an analysis of processes undertaken in a business. Quality accounting information results to quality decision managing (McCartney, 2004). This paper will discuss the type of accounting information required for decision making and the use of technology in information sharing in an organisation.
Types of accounting information that are important to staff when making decisions
There are different accounting information that are provided in daily accounting data, weekly, monthly, quarterly, half yearly or yearly accounting statement , and some which can be calculated from the statement for decision making. They include;
Profitability information (provided by trading profit and loss account)
This analyses the operation benefits that a company has gained in a certain operating period. The major aim of a company is to make profits. If the set targets have not been attained, it offers an alarm call to the management to look for areas of deficit and rectify them. Staffs contribute to the overall gain in an organisation and thus they require this information to gauge their effectiveness. There are different ratios used to interpolate profitability they are margin, mark up, and asset return rate, Equity Returns among others.
Assets and liabilities information (provided by balance sheet)
The balance sheet gives the financial standing of a company in a certain period of time. It is a list of assets, liabilities and capital in an organisation. When this statement is interpolated, the management will make decisions about their financing methods, credit policy, and financial obligation meeting strategies and interpolate how efficient it uses its capital and assets. The ratios which are used in interpolating balance sheet information include, gearing ratio, current ratio, quick ratios, asset growth ratio asset Turn over, liquidity test ratio, and inventory turnover, day’s receivables, among others. All these ratios assist in decision making (LIBBY, 1975).
Managerial accountant uses technology to develop and communicate this information throughout large company
The use of computers in an organization has assisted in information sharing and development. In accounting there are different software’s which are developed to capture, interpolate, communicate and keep accounting data. They include spreadsheets, QuickBooks, Sage, Sun system among others. At different points, for example in a sales point, data is fed into computers, the data is then transmitted to a database developed for such function for storage. The data can be retrieved from this storage system and interpolated to suit a certain need in the organisation. For example sales totals in a day can be calculated from transactions recorded in a computer data base. At the end of the year financial statement can be made from these totals (Michael, 2006).
Large organizations are interlinked using intranet; this is used to transmit data, including accounting data to relevant departments. On the other hand, data can be collected at different computer points and used by managerial accountants to advice other departments (Atrill & Jenner, 2009).
Accounting data is important for decision making in an organisation. Accounting information are daily data, weekly, monthly, quarterly, half yearly or yearly information; they can even take a comparison of a number of years. They assist management and staffs in making decisions for the good of the organisation. Technology assists in collecting, interpolating, analysing and reporting accounting data.
Atrill, M. H. and Jenner. (2009). An Introduction: Accounting 4. Pearson.
LIBBY, R. (1975). Accounting Ratios and the Prediction of Failure: Some Behavioural Evidence. Journal of Accounting Research, 13(1), 150-161.
McCartney, J. (2004). Accounting: A Framework for Decision Making (Book). Pacific Accounting Review (Pacific Accounting Review Trust), 16(1), 77-80.
Michael P S. (2006). Advanced Accounting: Concepts & Practice. Issues in Accounting Education, 21(1), 69.