Accounting for Managers

Past financial performance, good or bad, is not an indicator of future performance.

Unaudited published financial statements may contain either or both of these two types of errors: (1) unintentional mistakes, or (2) intentional misrepresentations.

Unless a customer provides prior period financial statements for comparison, there is no starting point for comparison.

Explanatory notes to the financial statements contain new information but many recipients do not take the time to read and understand these notes.

Fixed assets are shown on the balance sheet at their acquisition cost minus accumulated depreciation. The fair market value of these assets is always different from the book value.

Published financial offer no insight about anticipated changes in demand, competitive challenges, or management changes at the company under financial review

Published, audited financial statements can be changed legally by adjusting certain reserves.

In the short term, a company's financial results can be improved by reducing or eliminating discretionary expenditures û even if the decision affect the company's long term success

It is not enough to know a customer's financial weaknesses by analyzing published financial statements. It is also essential to know whethe

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of financial information are not identical to those of the users. For example, a company trying to get a bank loan or applying for open account credit terms may want to make its financial statements look better than they are to improve the chances of getting a loan or a line of credit. This is where the need for independent auditors becomes necessary. Improper accounting and inaccurate reporting tend to conceal waste and inefficiency, and thereby prevent economic resources from being allocated in a rational manner. For example, if customers present fraudulent or inaccurate financial statements investors may make the wrong decision and purchase the company's stock. Independent audits add credibility to a company's published financial statements. 2. Accurately analyzing each product cost provides an important management tool to assess the individual profitability of the products. This process helps companies to determine the company's optimal product portfolio by concentrating on manufacturing promoting and distributing its most profitable products. Traditional costing involves allocating a whole item of cost or revenue to a single cost unit, center, or account. In effect, traditional cost accounting allocates overhead to
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Some common words found in the essay are:
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Approximate Word count = 3431
Approximate Pages = 14 (250 words per page)

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