What is an activity accounting?
Accounting is collected, summarized and reports financial information from various decision -making centers of the company. The decision -making centers can also be called liability centers. The organization's responsibility focuses on costs, income or profits related to specific tasks. Managers use accounting activities to take business decisions on the basis of financial information from each liability center. These managers usually work at the organization's operating level and have well -defined responsibilities.
Owners, directors and managers at the executive level, often delegate obligations or responsibilities to lower -level managers. The delegation process allows operational managers to present their skills through management of part of the operational and financial information of the company. Activity accounting can also be used as a measurement technique concerning managerial performance. Organizations can use individual books, financial statements and more reports on the assessment of financial performanceThose different business operations. For example, the sales department of the organization may include financial information on sales, discounts, revenues and costs for the goods sold. The sales department can have very few expenditures compared to other business operations. These expenses may be related to office needs and other basic items. Sales managers will only be responsible for financial information under their direct control.
manufacturing companies normally use accounting activities because their operations contain a large amount of financial information. Obtaining resources, human resources, purchases of equipment and other information are commonly divided into different liability centers. Each liability center will have IFIC specifications. Accounting of activity monitors this information so that companies can correctly allocate all commercial costs for produced goods and services. The exact allocation of the cost of providingIt is that companies will be able to recover the commercial costs in selling goods or services to consumers.
Other companies use accounting activities to capture financial information unique for their operation. This accounting method allows companies to create internal accounting procedures for accurate monitoring and reporting information for business decisions. Internal activity or accounting procedures for administration usually disagree with regular financial accounting standards. This flexibility ensures that companies can measure their managerial or operational performance using financial indicators. The indicators may include return on investment, pure current value, gross profit range or other similar formulas.
Activity accounting can cause problems for companies in training or other employees. Individuals usually do not have previous experience with specialized accounting procedures of the company. Hiring new accounting employees will also require spolThey spent more time training and education of managers or accountants on these specific financial procedures.