Why “Accounting” may also be called “Decisioning”?
Accounting is defined as an information system that provides reports to stakeholders about the economic activities and financial condition of the business. It is also called the "language of business" since accounting is mode by which business information is communicated to stakeholder. Management accountants summarize the information that is relevant to the decision making needs of management – hence it may also be called “decisioning”.
Accountants use accounting data in communicating about a firm's activities. Information provided by them helps managers and other executives understand the results of business transactions and evaluate the financial status of their organization. With this knowledge, upper management can take informed decisions about matters such as production, marketing, financing or launching a new product in the market. The bigger the decision, the more accurate the information must be. Management accounting helps in making business decisions about internal direction and needs of the business.
People who use accounting information are owners, suppliers, customers, employees, investors, creditors, governmental regulatory agencies, taxing authorities.
It tells what is economic condition of the company , how much money company has for running day to day operation, payroll or investing in new venture. It allows management to decide about future investment decision, new product launches and hiring new employees (or downsizing). Investors know about company economic health and can decide whether they want to invest in the company stock or not. Employee can decide about their future whether to stick with company, invest in company’s 401k and plan accordingly. Customer also needs to know about future of the company before buying products especially if it is expensive and needs regular service. Supplier needs to make sure before shipping that they will be paid timely. Creditors will base...