Essay on Accounting: Accounts Receivable and Strategic Business Moves

Submitted By kswansons
Words: 311
Pages: 2

Accounting is the language of business. In management, accounting is used on a daily basis to make important decisions. Managers use balance sheets to determine the cash on hand so they can know how to pay for purchases-with cash or with a payable. The balance sheet also tells us accounts receivable and accounts payable. This is important because it can help prevent a loss of income by following up with receivables and an overdue payment on payables. Knowing the company’s budget and how to read it is also an important aspect of management. It is vital to stay on or under budget to generate a profit and to make sure projects are going as planned. Accounting information can also tell managers trends in the company’s sales and profits so if sales start falling managers can recognize this quickly and fix the issue so they can continue to turn a profit. Accounting information is used in part to set the company’s goals, look at the performance of the company-from individuals to departments to the whole, and to make decisions about products. Without accounting, managers would have to make decisions based on instinct, rather than based on the hard facts like they are able to do by using the resources given to us by accounting. Upper level management uses the net income to decide how many, if any, dividends are paid out to stockholders. It’s also important to know how much inventory the company has in its possession so managers can decide how to proceed with either ordering more or