IHMN520 Financial Analysis and Decision Making

Answer 1

Yes, due to the nature of the historical accounting is less important compared to the management accounting. The following are the reason of the historical accounting is not useful for the financial decision making:

1. The historical accounting provides the information related to the transactions occurred in the past but the management accounting uses the historical data and provides the information related to the future of the organization.
2. The management accounting provides the information about the efficiency and effectiveness of the operations but financial accounting provides the information only about the profitability and the financial situation of the organization.
   
   

Answer 2

No, Profit maximization is not only the criteria for the measuring the performance of the profit – seeking organization. Following are the measures of the performance of the organization:

1. Customer Satisfaction: The customer satisfaction refers to the no. of the customers are satisfied by the product or service of the organization. This also refers to the customer loyalty gained and the market portion covered by the business.
2. Employee Welfare: This refers to the benefits given to the employees of the organization to motivate them to work harder for the increasing the profit.
   
   

Answer 3

Yes, the information requirement for the long term decision and short term decisions  are different from each other. The following table will elaborate the difference in the requirement of the information:

Sr. No.	Long Term Decision	Short Term Decision
1.	The long term decision involves huge amount of resources.	The short term decision involves decisions involves very less amount of resources.
2.	These decisions are taken for creating mission and plans for the organization.	These decisions are taken to convert long term decisions in functioning and achieving targets.

 

References

Wanderley, C.D.A., Cullen, J. and Tsamenyi, M., 2020, November. Corporate political strategy: the roles of management accounting in relational work. In Accounting Forum (pp. 1-27). Routledge.

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