This website uses cookies to ensure you have the best experience. Learn more

The Importance Of Reliable Measurements In Accounting

2307 words - 10 pages

Performance measures play an important in all companies and their daily operations. By providing multiple methods of comparison and evaluation, accounting measurements provide a better view of the overall state of a corporation. Not only do investors use certain measures to help decide in which companies to invest, but internal managers use other measures to make sure their company is meeting set standards and that it is not falling behind or losing money. Therefore, it is important that these measures are accurate and not misleading. It is up to auditor and regulators, such as the SEC, to ensure that only reliable measurements are being provided. While customized measurements can more accurately focus on the goals of a specific company or process, more traditional measurements can be used to compare companies or processes. With the rise in popularity of customized or specialized performance measurements, their validity must be compared and contrasted to that of traditional measures of performance.
The importance of creating performance measures stretches from internal managers all the way to external investors. Internal managers can use different performance measures to help determine if a company is running efficiently and if it is meeting standards that were preset. For example, an internal manager of a manufacturing plant can use performance measures to see if enough products are being made to meet demand, if the machines are being utilized for the most profit, and if there is enough employees to efficiently operate the machines. Executive management can use performance measures to determine if their organization is on track to be profitable for the year and, if not, they can use them to determine why not. Investors and analysts can use performance measures to determine the outlook of stocks and whether or not it is a good time to invest. Investors commonly compare the measures among different companies in the same market to determine which companies are the best fit for them in which to invest.
Executive and internal managers can use different performance benchmarks to help them improve their operations. Certain benchmarks can help managers set better goals for the next year and help forecast for the next year. There are also measures that can be used to ensure all parts of the business are profitable and, if there is one that is not, they can determine whether to remove that segment or not. Other measures can be used to ensure all employees are working efficiently and that all products being made meet quality requirements. “Firms often rely on strategic performance measurement systems to facilitate managers’ strategic decision-making. By aligning strategic constructs, initiatives, and objectives with related performance measures, these measurement systems function as a framework that organizes the firm’s information environment around its strategy. Among many other benefits, this alignment enables managers to make strategic decisions...

Find Another Essay On The Importance of Reliable Measurements in Accounting

The Importance of the Client-server Computing in Computerized Accounting System

866 words - 3 pages IntroductionMagnificent Music, a CD and DVD retailer, consider expanding its business to other capital cities in Australia out of Melbourne. It prefers a centralized database and client-server system in order to operate the stores effectively and efficiently. This report mainly focuses on two aspects, the importance of the client server computing and how the client server architecture achieves the goal.Importance of the client-server computing

The Evolution and Importance of Generally Accepted Accounting Principles

1601 words - 6 pages . Therefore when comparing and analyzing financial records, a set standard followed to achieve stability from one company to the next. This paper will focus on a brief history of GAAP and how the widely known accounting procedure was established. Additionally it will focus on the four assumptions and four principles of accounting that work together to comprise GAAP. Furthermore, there will be an emphasis on the importance of using GAAP in accounting

Direct and Indirect Measurements of Stereotypes Analyzing the use of Direct and Indirect Measurements of Stereotypical Behaviors

1165 words - 5 pages Direct and Indirect Measurements of Stereotypes Analyzing the use of Direct and Indirect Measurements of Stereotypical Behaviors In the direct measurement of stereotypes, such as the free response, scientists must ask if it is a reliable measurement of stereotypes. Many people may answer a free question regarding a particular group, but answers may be given to the tester of what the tested may what the tester to hear. For example, if a

Is the reader expected to view the signalman's account of events as reliable in Charles Dickens' story "The Signalman"?

762 words - 3 pages decision to accept or question his account. If you accept his version of events, the story is a ghost story full of tragic disasters and vague warnings. If you question him, the story becomes a psychological thriller which takes you on his descent into madness.There are many references in the story that suggest that the signalman's version of events are reliable. The narrator discovers that the signalman is a well educated man, "perhaps educated above

History of Reliable and Clean Water Supply in New York

1726 words - 7 pages importance to the City’s character and inhabitants” (100). The push to use only the best water highlighted New York’s underlining water management faults. The question on how New York monitored and conserved its water came into question. For the majority of New York’s history the use of water was unregulated, yet when New York faced a drought crisis in 1965 New York had to reconsider its water management plan. The drought of 1965 was the first

Ancient Authors: who was the most reliable in Ancient Sparta

977 words - 4 pages ‘It has been said that Sparta had two separate histories, its own and that of its image abroad...Considering how much was written about Sparta in antiquity, it is remarkable how confused, contradictory and incomplete the picture is. Partly this is because the mirage is constantly cutting across the reality, distorting it and often concealing it altogether; and partly because the Spartans themselves were so completely silent.”With

The Necessity for a Reliable System of Law

972 words - 4 pages on by a formal legal system. Whether law and morality should be the same is a question that is debated, positivist like Hart affirm that law and morality are fundamentally isolated from each other, but proponents of natural law theory believe that law and morality should coincide. In today’s society, a reliable legal system is need in order to deal with disorder and conflicts, and in order to have a reliable system, and by reliable it is

The Relationship Between Anthropometric Measurements and Percent Body Fat (PBF) in Students

1701 words - 7 pages Abstract Objective: To study the relationship between anthropometric measurements and percent body fat (PBF) in students (17-19 years) and to find the percentage of males and females who are obese using percent body fat cut off values, since Obesity is a predisposing factor for many diseases like Hypertension, Type II Diabetes Mellitus and Coronary Artery Disease. Methods: Weight, height, Waist Circumference (WC) and Hip Circumference (HC) of

the importance of client-server computing for the computerized accounting system

1024 words - 4 pages Untitled Introduction Magnificent Music, a CD and DVD retailer, consider expanding its business to other capital cities in Australia out of Melbourne. It prefers a centralized database and client-server system in order to operate the stores effectively and efficiently. This report mainly focuses on two aspects, the importance of the client server computing and how the client server architecture achieves the goal. Importance of

The Use of Information Technology in Accounting

3368 words - 13 pages Intro In this day and age, it is almost unthinkable to perform accounting functions without the help of information technology (IT). Accounting dates back to 3600 BC when the oldest business event was recorded and there is evidence accounting systems were utilized in ancient Greece, China, and Rome (Knežević, Stanković, & Tepavac, 2012). Managerial accounting is a relatively new function of accounting and provides information such as capital

The Importance of Diversity in the Workplace

796 words - 3 pages Companies such as Buzztronics are leading the way in the global economy because of their dedication to diversity in the workplace. In order to build a diverse and successful workforce, a business needs to recruit, train, and retain capable and talented minorities. Deloitte, a prestigious financial firm that deals mostly with accounting, traditionally recruited from top tier colleges and universities, as a result most of their new hires were

Similar Essays

Measurements In Accounting Essay

630 words - 3 pages included in the measurement bases, but it is a widely used basis now, and it will be discussed with other measurements as below. 2.2 Measurement Bases  Historical cost shows a prudent attitude to measure the past performance and net assets which are actually incurred. It is reliable when based on actual transactions.  Current cost, just as its name implies, shows the amount of cash or cash equivalents that was acquired currently. When there are

The Importance Of A Reliable Character In Jane Austen

1017 words - 4 pages The Importance of a Reliable CharacterAs a novelist, Jane Austen must guide the implied reader's views in order for the complete impact of her plots to be perceived. Austen accomplishes this through many rhetorical techniques; however, she is most successful when using a reliable character's viewpoint. Several times Austen relies on a proven, sensible character to control the implied reader's opinions and reactions. With this control, Austen is

The Measurements Of Desertification Essay

772 words - 3 pages The Measurements of Desertification “Drought and desertification threaten the livelihood of over one billion people in more than 110 countries” warned general Kofi in 2001 (Kovach,2003). Desertifications definition is highly disputed but it is generally the shift of arid or semi-arid regions to desert-like conditions, which support: little vegetation, a low soil fertility and high evaporation rates (Haggett, 2001). This

The Use Of Anthropometric Measurements To Assess Nutritional Status: Advantages And Limitations Of Anthropometric Measurements

3088 words - 12 pages specific tables. The other alternative measurements, as a knee height and demispan can also be used to estimate height. (Todorovic et al, 2003) Moreover, the simple indices as body mass index ratio as a combination of weight and height can be used in population studies to designate obesity level at population group. The more complex combinations, such as weight-for-age, height-for-age can be used to compare the reference population data with an