The disciple of accounts for many years has been viewed by management community as a fundamental tools in the decision making process. Traditionally, the accounting system has been known to provide much financial data which are very helpful in decision making. Today, there has been conspiracy whereby the field of management is greatly dissatisfied with current accounting systems. Many managers believe that the accounting systems have greatly failed in adjusting its activities and objectives towards decision making. This study will focus on defining potential benefits for management accountants in understanding existence of diverse explanations of decision making processes.
For a good argument, the study will neither assume that accountants are not in touch with management process so as to be obsolete nor accountants are far from van guarding newer management so as to be more contented (Emsley, 175). Managerial accounting is concerned with providing information to managers inside organization assisting in directing and controlling its daily operations. It can be defined as a process whereby there is measurement, accumulation, identification, analysis, preparation and communication of information used by managers in decision making.
It further comprises the preparation of financial information for non-management group such as regulatory agencies, creditors, shareholders and tax authorities. The aim of these management accounting include; safeguarding companies asserts, formulation of strategies, supporting of financial reports preparation, assists in making decision and planning and constructing business activities. Accounting for decision making greatly involves a certain way of viewing managing process and decision making within a business. Here, decision making does not necessarily consist solely on choice involved between two or more alternatives. Here, decision making entails more than a final choice which is considered to be the culmination of decision making process.
Further, accounting entails coming up with decisions that have many ethical elements to them. This is because the impact that arises from accountant made decisions is expected to greatly affect stakeholders in various ways thus expressing various ethical values (Simons, 124). It is quite observable that in management accounting, most decision making is simply defined as choosing a specific quality action from various alternative. Clearly, when there are no alternatives then there is no need for any decision to take place.
In accounting, it is assumed that the best decision is one that entails most revenue as well as least amount of cost involved. Decision making for accountants entails achieving the best among all alternatives. To achieve this process of decision making generally follow the following steps namely; clearly identifying various alternative to which a concrete decision will emerge, obtaining all necessary date that will greatly assist in evaluating all alternatives, analyzing and determining the various consequence that may be linked to each alternative, selection of alternative that is likely to result to achievement of stipulated goals, implementing the alternative chosen and finally at a specified alternative time evaluating results based on decision against other desired or standard result.
It is from these steps that management of accounting forms a focal point for decision making (Simons, 124). Strategic decisions are defined as those decisions which are broadly based and can be termed to be qualitatively since they widely reflect organizational goals and objectives; they are further based on subjective thinking of management accounting concerning stipulated objectives and goals.
Tactical decisions are defined as those decisions considered being quantitative and greatly resulting from strategic decisions. The difference that exists in these two decisions is very essential in marketing accounting since most decisions are pertained to be primarily related to tactical decisions.