The Impact of Accounting Models in Management Decision

Tatiana Danescu,Luminita Rus

doi:10.5171/2014.867281

Abstract

At the moment in Romania there is a bolding of the phenomenon of dissolution of societies with limited liability and starting a business by the associates of these companies, individually, through so-called Authorized Individuals (PFA). Analyzing this phenomenon, you may find that the financial side is the primordial element that determines such a decision. This paper presents a case study on the influence of accounting models 〞cash〞 and 〞accrual〞, comparing the results of activity of the five companies, in five different areas of activity over a period of five years. The purpose of the research is to determine the elements that differentiate the result by using an accounting model 〞cash〞 or 〞accrual〞. It is found that, in some companies, the gross result established based on the accrual accounting is totally different from that determined based on the cash method. One of the reasons for such differences may be the duration of settlement of receivables and payables.

Highlights

An essential element of the management and, at the same time, a specific instrument is the decision
As noted in the case study presented, significant differences between gross results set by the method of “accrual” accounting are present in each entity examined
Conclusions regarding the net result cannot be stated because on the period analyzed for determining the tax payable, the entities were applied with different rules to determine the tax liability

Summary

Introduction

An essential element of the management and, at the same time, a specific instrument is the decision. The decisions made and their degree of applicability shows the quality of the management of an entity. In order for a decision to be good, the knowledge of business is required, of management’s objectives, as well as the knowledge of staff who will attend the fleshing out of the decision. The managerial decisions are influenced by the type of accounting method used.

Objectives

Methods

Conclusion