TOUGH DOLLAR DECISIONS - eCommerce Bottom Lines
The people who make decisions in accounting make them in relation to three categories. The first category consists of people who manage a business; Second are the external people of a business who have a direct financial interest to that business, and the third of people and organizations that have an indirect effect on the business. This applies to non profit organizations as well.
Management refers to the group of people who are in charge of operating a business and for measuring up to the profitability and liquidity goals. If a business is extremely large, then management of it will most likely require more than one person, plus people that are hired to perform various functions of the business. Managers need to answer important questions regarding the company’s net income, and whether or not they have a substantial rate of return.
Another question concerns whether or not the company has enough assets, and which products bring in the most money? When making a decision, managers usually follow a systematic approach. Even though larger businesses require a more comprehensive analysis, they follow a similar pattern to small businesses.
Financing a business
Financing for a company is critical, because they need money with which to continue their operations. Here is a popular website that offers additional information about financing a business. The SBA is a governmental agency.
Investing in the business
Companies invest in their current assets as a means of self-financing as well as future earnings if the companies continue to do well, in which case they stand to gain substantial profits.
Producing goods or services
Operations and production management is responsible for developing and producing goods and services that the company can sell.
Learning marketing and advertising skills so that they can distribute goods and services more efficiently.
Human resource management requires hiring, qualified employees, supervising them and paying them.
The information management retrieves data about the company such as how much they made in the last month, and organize the data in a way so that it can be used effectively. It also releases information to managers, and to important people outside the business.
TOUGH DOLLAR DECISIONS - eCommerce Bottom Lines, continued.
Another group of individuals that needs knowledge in accounting are those who have a direct interest in the business. They use the information to analyze how a business is performing. Most businesses generally publish their financial report which shows how well they meet their profitability and liquidity goals. These statements display how well a company did in the past and probably most important, how well they will do in the future.
However, many people outside the business also study the financial reports. They are the investors and the creditors. Investors are individuals that invest in a business and will keep a part of the ownership. They are concerned with the past success and failures of the business, and also will like to know the potential earnings. A concrete analysis of the financial statement will help prospective investors base their decisions. Once they have made the investments they must continue to study a business financial statements.
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Next, the creditors are companies that lend money to businesses for short or long term needs. Creditors are the people that deliver money to companies or provide services to them in advance of payment. Their main concern is whether a business will have the money to repay their money with interest in an agreed-upon period of time. Some of the things they study before making decisions are a company’s liquidity, cash flow, and profitability. Some examples of creditors are banks, mortgage companies, and insurance companies.
Over the years people who used accounting information has varied significantly. Now, it is heavily relied upon by governmental agencies. In fact taxes are the main sources of government revenue. According to the rules and regulations of federal, state, or even local laws, individuals and companies are required to pay a variety of taxes. These include but are not limited to, sales tax, excise tax, social security tax, federal, state, payroll, and city income taxes. Each tax requires its own rules and regulations which can be very confusing at times.
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The tax laws are subject to a very meticulous and tedious process. For example, The Internal Revenue Code contains over a thousand rules for delivering accounting information in federal income taxes. Also, most companies generally have to report to at least one regulatory agency in the United States. All corporations must answer to the Securities and Exchange Commission or SEC http://www.sec.gov/. This is set up by the government to insure against fraud and protect the public by regulating the buying and selling of stocks. Companies that are listed on the Stock exchange must adhere to the SEC rules and regulations.
Some other groups such as labor unions analyze the financial statements of corporations to help negotiate their contracts. The income produced by a company plays a major role in forming these contracts.
The individuals who give advice to investors and creditors such as brokers and financial analysts have an indirect financial interest in a business. The interest shown in the financial health of corporations by consumer groups who advocate on behalf of buying customers and the public in general has been growing. They are also concerned about how the corporation will affect social patterns of the environment and of the people who reside in that area. The President’s Council of Economic Advisers and the Federal Reserve Board use accounting information to set economic policies and programs.
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Admin's Observation: In civilized society we adhere to certain codes, some of which you may be familiar with: Code of Ethics, Code of Conduct, Code of Honor, Dress codes, Tax codes, Penal Code, etc. And that's only a smidgen of the offline codes we are all subjected to in one way or another.
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More of TOUGH DOLLAR DECISIONS
It’s interesting to note that about thirty percent of businesses in the United States consist of non profit organizations. Some examples of non profit organizations (NPO) include hospitals, and universities. Some well known non profit organizations include Red Cross, YMCA, Better Business Bureau, and WWF (World Wildlife Fund, was formerly in a lawsuit and won against WWE World Wrestling Entertainment, which was originally known as World Wrestling Federation).
You may think that the managers of these organizations don’t need to know their accounting skills but they do. They still have a budget and needs to raise money just like any other business. They raise money by collecting it from creditors, donors, and even investors. They also need to have a credible plan to pay creditors back in an efficient manner, as well as adhere the tax rules. So even though businesses and non profit organizations have different agendas they generally follow the same basic accounting rules.
Accounting is a systematic information system that measures, process, and communicate information, particularly financial. When accountants are making a measurement they must answer four simple questions. First, what is being measured, second when should a measurement be made, third how much money should be placed on what is being measured, and last how the measurement should be classified. These four questions deal with the basic rules of accounting, and the answers help establish what accounting is and what it is not.
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Accountants in different fields challenge these rules every day, and therefore the answers are changing often so that’s why it’s a good idea to keep up-to-date with business and accounting trends. Regarding the first question - what is measured - consider a machine that makes clothes. How many different measurements of this machine can you make? Well, you can measure how much it costs, how many T-Shirts it can produce, and how quickly it can produce the T-Shirts.
Some of these measurements are extremely important to accounting and some of them are irrelevant. Financial accounting will use money to see how business transactions affect other businesses and corporations. Online companies active in eCommerce trade subscribe to similar accounting standards but must take slightly different income and expense calculations into consideration.
There is much more to the Dollar Counts eCommerce treasures website, so we encourage you to browse the jewelry pages - Brilliance, Illustrious & Radiance - and blog - Diamond Treasures - plus the personal finance pages - Write Styles, Write Styles ll and Write Styles Hockey - and of course, the gift4u pages - Uniquely Gift4U and More Uniquely Gifs4U plus lots more. If you are active in Web marketing you may find this eMail marketing content helpful. Happy browsing!