Financial Accounting as a fundamental element in managerial decision making

Written by:Diomer Antonio Galán Rincón.

Bachelor's Degree.Public Accounting / MSc.Science of Higher Education.

We currently live in a society based on information and knowledge, using a wide variety of information. Within this accounting universe there is a vast world of financial information that tries to reflect the reality of economic organizations. However, in order to understand the importance of financial information, it is necessary to have knowledge of its usefulness and benefits for decision making.

While it is true, the basic purpose of accounting is to provide useful information about an economic entity, to facilitate the decision making of its different users (shareholders, creditors, potential investors, clients, administrators, government). Considering that accounting serves a set of users, several branches or subsystems originate from it, each one in particular with a purpose aimed at providing economic results of a given organization.

It should be noted that decision making by economic subjects requires relevant data about the facts to be decided upon. And although there is no doubt that sometimes fortunate decisions can be made based on intuition, it is no less true that for a specific economic reality, the possibilities of making reasoned decisions will be much greater if there is reliable and relevant information about that reality.

On the other hand, information is an essential resource for reducing uncertainty in business decision-making, and in order for it to be used correctly, it is necessary to establish an effective financial accounting process that transforms the multitude of data generated by the company's economic activity into useful testimony that facilitates this process.

It is important to emphasize that accounting is currently the most effective and useful information system for preparing and communicating economic information on the productive activities of companies. In this context, financial accounting represents a process aimed at supporting the organization's strategy and will also be a powerful tool for business competitiveness.

In conclusion, this accounting process guarantees the presentation of real financial statements to stakeholders, and also ensures detailed knowledge of the economic reality of a given organization through efficient processes in the accounting management of all transactions that guarantee the safeguarding of assets and the optimization of resources.

I hope you like my article and I would appreciate all your comments.

1.- Brito, J. (2007). Financial Accounting. (8th ed.) Editorial Centro de contadores. Caracas, Venezuela.

2.- Infante, A., and López, Y. (2016). Financial Accounting for Decision Making, Zulia State. Venezuela.