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Using Accounting Data to Make Business Decisions

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Need help on if I was hired as the CFO of a new company and are determining the company's accounting needs.

Explain to your staff at least 2 ways in which accounting data are used to make business decisions.

Explain at least 3 related accounting terms or theories.

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Solution Summary

The use of accounting data in business decisions is discussed along with a discussion of materiality, going concern and conservatism. 587 words with 2 references included.

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1. Explain to your staff at least 2 ways in which accounting data are used to make business decisions.

In the marketplace, decision making involves the trading of scarce economic resources at a price. It's not only the price that matters but there are many other factors such as social, environmental, religious, cultural, etc. There is always a flow of money or monetary equivalents in the marketplace and here is where decision making takes place. Everyone in the marketplace, especially business owners need to make informed decisions and in order to do this, knowledge of accounting concepts, standards and measurement systems is very essential.

Accounting uses terms and symbols to show financial information which is useful in business decision making. Knowledge, familiarity and experience in accounting are crucial in any business because managers need to know how to interpret the accounting data to help them arrive at the best decisions. Accounting is the "language of ...

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