According to a Houston Chronicle article by Grant Houston, strategic management accounting is a form of business inquiry that combines the accounting criteria of an organization with external factors that influence the organization, such as industry trends in costing, pricing, market share and resources. The goal of strategic management accounting is to provide companies with a comprehensive means to analyze future business decisions. It is more complex than management accounting.Know More
Houston explains that a company's strategic management accounting program rests on three primary elements, which are quality, cost and time, or QCT. Each company's QCT results vary based on the needs of its customers and the changing demands in the market. For example, one company's customer base may value quality over cost and time, while another company's customer base may prioritize cost savings over quality and time. These results help to guide a company's strategic initiatives so that it is able to better serve its customers and differentiate itself from competitors.
Strategic management accounting also amalgamates data from technical, behavioral and cultural measurements relating to a company's specific industry. When a company is able to identify its core asset base, it can better determine where to place its efforts and invest in growth. Without knowing where to evolve and how to compete with industry rivals, a company risks wasting its resources, notes Houston.Learn more about Accounting
Throughput accounting is an offshoot of variable cost accounting that treats direct material costs as the only variable cost, while all other costs are assumed to be fixed, explains Richard J. Lukesh of Turnaround.org. The accounting approach was developed by Eliyahu Goldratt as part of the Theory of Constraints paradigm.Full Answer >
Intercompany accounting is the process by which firms reconcile a company's transactions to eliminate duplication among different departments that may result in overstating assets, according to Oracle. Companies must adjust accounting practices for intercompany transactions or face legal consequences.Full Answer >
Accounting is important because it provides an objective picture of a business' financial success. In addition, accurate bookkeeping and accounting is extremely vital for tax and legal purposes. Many companies are required to have particular accounting procedures in order to comply with legal code.Full Answer >
Accounting information is important for decision making, record keeping, and discovery and prevention of theft. The information is also useful when applying for a grant or loan. Availability of accounting information creates a good reputation for an organization and enhances an individual's credit score.Full Answer >