Accounting Administration: What it is, Objectives and MORE

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The accounting administration It is a scientific discipline widely used by people who are interested in the financial, economic and mathematical fields. In fact, it is one of the most studied university majors globally.

Of course, if you want to know more about the accounting administration, or if you want to study this career and want to know the basics of this science, Look no further!, This article is for you. Next we will explain from the simplest concept of accounting to the most complex.

Just keep reading!

What is the Administration?

The administration is known as a social science that studies certain organizations, either public or private. In turn, it is in charge of analyzing the different planning strategies, coordination, control and direction that must be applied in the management of resources directed to the operation of said companies and guarantee the fulfillment of their objectives.

In such a way that, the administration understands the proper and efficient use of resources that a certain company owns in existence. Either human, technical, material, financial, cognitive or systematic that allow obtaining maximum benefit.

From this, administration studies are considered interdisciplinary and, in turn, must be related to other fields that are linked to the action of managing a company. For this reason, it is necessary to include knowledge about statistics, economics, accounting, marketing, rights, among other necessary disciplines that are developed in conjunction with accounting management.

In general terms, the word administration refers to the functioning and performance of the structure of a given organization who is at the service of others.

What is contability?

While it is true, the accounting is known as a scientific discipline that works through an information process that allows to collect, identify, record, evaluate and report and execute the follow-up of the development of the operations of a financial institution. This of course must be clear and complete.

Moreover, it is a key tool that allows to know in which situation an organization is. With this documentation, the necessary strategies can be established in order to improve your economic performance.

Likewise, accounting is a necessary element that must be available to manage the expenses and income of an organization. In this sense, any company that is in full development of its activity its assets vary and it obtains a profit or a loss.

In other words, accounting is defined as the branch of finance that studies the different items that reflect the economic and financial movements of a certain company.

If you want to know a little more about accounting, we invite you to visit the Web page from the Continental University of Peru. There they reflect interesting facts about accounting that you probably did not know.

Accounting Objectives

Of course, it is important to highlight the main objectives of accounting. Let’s remember that, in a certain way, it is a science that analyzes the history of a company in order to make a reasonable decision-making and thus satisfy the information demand of different interest groups. As for example, shareholders, lenders or public administrations.

Thus, the objectives of accounting are the following:

  • Analyze the economic resources of a company.
  • Control and keep a record of the administrations’ actions.
  • Control and register the tax burdens of the organization.
  • Help predict income streams.
  • Collaborate with the corresponding information at the time of executing statistics that relate to the economic activities of the company.

What is the concept of Accounting Administration?

On the other hand, when you combine both concepts mentioned above, we have as a result the term of accounting management. In this sense, it is also known as administrative accounting or gerencial administration.

Now the accounting administration It is defined as a system that is responsible for providing information to the administration in order to facilitate its functions based on planning and decision-making that allow it to differentiate itself from other companies.

Indeed, it refers to the administrative aspects of the company and its corresponding reports. Which are for internal use and also managed by the owners and administrators of the organization. This allows to determine the development of the company in relation to its goals and policies pre-established by the management or the direction of the company.

To conclude, it is known as gerencial administration to the type of accounting that focuses directly on the needs of generating reports and of course, cooperating in decision-making at the various administrative levels.

On the other hand, it is important to mention that the reports generated are applied so that the administration of the company develops efficiently and optimally.

What are the Characteristics of the Accounting Administration?

The administrative accounting It has at its disposal certain characteristics that allow it to be identified, since this science is often confused with other accounting concepts. To begin with, it is important to note that accounting administration applies a technique that is based on the utility provided by internal and external information.

  1. It focuses on details related to different departments that make up an entity. Such as inventories, property, plant and equipment.
  2. It is executed so that the managers of the organizations can make decisions efficiently.
  3. As we already said, it provides internal and external information about the company.
  4. It is based on a wide variety of information, as well as, accounting data.

In another vein, the administrative accounting It is characterized mainly by being one of the most useful tools in the business sector. Therefore, a certain company will never be able to carry out certain planning if it does not consider the accounting administration as an important element in the development and growth of your organization.

Relationship of Administrative Accounting in Decision Making

If you notice, throughout the article we have constantly mentioned the fact of making decisions, which of course, is an aspect that is related to accounting and administration. As expected, decision-making is a very important process that can affect the organization, either positively or negatively.

However, it is quite a procedure and consists of the following stages:

  1. Analysis.
  2. Recognize the existence of a problem.
  3. Define and delimit the problem.
  4. Search, obtain and analyze the necessary information.
  5. Decision.
  6. Propose alternative and select the best one.
  7. Put into practice.
  8. Put the selected alternative into practice and monitor its efficiency following an action control plan.

To conclude this point, it is obvious that the quality of business decisions are based on the administrative and economic information available. This is why, for a company to develop successfully, it must have a good information system.

Objectives of the Accounting Administration

As mentioned above, the accounting administration It is a branch of accounting that allows the planning, control and decision making of a company. Indeed, its main objectives include guaranteeing the effective development of the organization through the execution of its functions.

Among the objectives of the administrative accounting, we find the following:

  • Motivate general human resources to achieve business objectives.
  • Facilitate the decision-making process with the support of reports that reflect relevant information.
  • Provide information of interest about the costing of services and products that are of great relevance to the organization.
  • Help managers planning and executing strategic guidelines in the short, medium and long term.
  • Support administrative control. This works as a feedback tool for the different sectors and managers of the company.
  • Evaluate the performance of the different areas and their competencies in meeting the objectives set by the company.

How Does Administrative Accounting Work?

As we already know, administrative accounting produces information for internal use, that is, exclusively for the owners and administrators of the organization. In this sense, the managerial administration evaluates and improves the operating policies for the company, as well as studies all its sectors and recognizes which are efficient and which are not.

It is important to mention that management accounting is focused on the future and information is the reference point for planning and controlling operations. On the other hand, it is in charge of knowing the costs of different products or processes in order to achieve cost leadership within its performance sector.

It is responsible for resorting to disciplines such as finance, statistics, economics, operations research, among others, to complete the information presented and thus be able to provide solutions to the problems of the company. On the contrary, it is not regulated by financial information standards, but it is adjusted to the needs of each user.

Let’s say that accounting management is optional, however, the operation of said company may not be as optimal as that of others.

Thanks for reading! We hope to have given you all the information you were looking for about the accounting administration.

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