Management Accounting Principles and Effective Planning Tools for Managing Accounts
In addition to that, managerial accounting employs cost analysis technique that embraces variable and fixed costs to acquire information. As such, the final decision on a given product usually reflects the information received by the managerial accountants (Warfield, et al, 2012). The financial market is one of the most fundamental aspects of that a company should give due weight before making short-term decisions. Primarily, the rate of interests that are charged by financial institutions is the primary factor that has a bearing in decision-making processes in business. As such, a company should carry out an analysis of the current and future trends in financial markets before borrowing money from financial institutions. For instance, a company should ensure that the interest rate on the money that it borrows does not negatively impact on the current and future operations of the business. Therefore, it is fundamental that a company predicts the financial market outlook and only take loans that it can be able to pay within the agreed period. If the business fails to meet its financial obligations, then it is likely to face additional financial expenses such as charges on default payments or an additional loan to repay the earlier one, an aspect that may be strenuous to the financial capability of the organization (Nordhaus, 2010).
Therefore, management accounting and financial accounting are very different.
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Nordhaus, W. D. (2010). The political business cycle. The review of economic studies, 42(2), 169-190.
Warfield, T. D., Wild, J. J., & Wild, K. L. (2012). Managerial ownership, accounting choices, and informativeness of earnings. Journal of accounting and economics, 20(1), 61-91.