Archive for March, 2011

Accounting 201: Real World Accounting

March 5, 2011

Managerial Accounting – accounting activities that provide information to managers for planning and control purposes and for making operating decisions.

Responsibility Accounting – an accountability system where managers are held accountable for differences between budgeted and actual results on only those items they have actual control of.

Pretty far out there, right!?! Seriously, using these accounting terms – really embracing the concepts and giving managers the tools to plan, manage and control and then holding them accountable for those decisions will have a real impact on your company.

Remember, when bonuses have no relation to what one does – when managers are held accountable for items not under their control, the bonus becomes meaningless. Think about it, if the reason you don’t get your bonus is because someone else didn’t do their job why should you be penalized. Why should you do your level best on your job if you can still lose your bonus due to factors beyond your control – Empower your employees and they will work harder for you!

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