Managerial Accounting and the Bible, Essays (university) of Principles of Accounting

Download Managerial Accounting and the Bible and more Essays (university) Principles of Accounting in PDF only on Docsity! Managerial accounting provides helpful information and reports to managers and entrepreneurs, and it is a process of identifying, analyzing, and recording financial information. In turn, management uses the information and reports on the company for both planning activities and making decisions. Moreover, these reports can be used to compare the company’s anticipated results to the actual results. However, managerial is more than just numbers, budgets, and rules; it is also God’s work, and the Bible holds a wealth of information pertaining to it. According to Hagerman (1980), “The Bible has references to budgeting and the helpfulness of allowing participation in the budgeting process. In addition, the Bible provides advice on how to evaluate a product. These are, of course, all managerial topics” (p. 74). There are also numerous passages relating to the implications of fraud and the importance of ethics, and they are just as applicable now as they were when the Bible was written. One important aspect of the role of a managerial accountant is “determining the costs of an organization’s products and services” (Wild & Shaw, 2018, pg. 4). By paying attention to what accountants analyze and determine about a business, it can turn management’s attention to possible profitable opportunities for the organization. While this may hold true, it can also provide information that warns managers of impending issues within the company. One important aspect for any company to consider is budgeting, and the Bible relates to this by stating, “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it” (Luke 14:28, ESV). Just as the Bible states budgeting is important, companies must also closely consider their funding and budget wisely in order to run a smooth operation. As Hagerman (1980) observes, “The Bible contains references to current managerial accounting concepts. It recognizes the importance of budgeting and the behavioral implications of participation in that process” (p. 75). Managers are also interested in predicting the future of their organizations and this is done through planning, which is a central role played by managers. Information is a prerequisite in this quest and managerial accounting comes in handy to equip managers with the much- needed information that is important in planning future activities (Wild & Shaw, 2018, p. 4). Budgeting is a quantitative representation of what the future of a company will look like. As a result, managers utilize budgeting information to plan and explore alternative actions to determine the most appropriate action to be taken. For instance, budgets contain important product information such as prices and cost estimates. Such information is useful in cost allocation and choosing the products to manufacture with the available resources. Resources are generally scarce, and optimum utilization is the target of managers. Achieving such optimum levels of resource utilization can only be achieved by subjecting the budget to a sensitivity analysis. By doing so, resource wastage by inefficient departments is minimized. Thus, the importance of managerial accounting lies within the planning of the future. The scripture also highlights the need for planning. In Proverbs 21:5 (ESV), Solomon explicitly explains that diligent planning will be generously rewarded and that a lack of planning leads to poverty. As budgets are planned and presented for future terms, we know that there can be incidents that arise which can cause issues with the forecasted budget. As we make plans to present quantities of expected output, whether it be in the terms of production or income, we use the information that we have found from past terms and historical information to decipher what we expect will happen. While we have created the budget based on this documentation, we also must consider factors that can arise which can sway the outcome of the actual results. We know that when Jesus walked the earth, His actions and teachings frustrated the chief priests in the Jewish community. As the Bible states, “And the chief priests and the scribes were seeking how businesses, the protection of assets could go by the wayside. That is why it is very important to honor the business with the utmost regard and protect it with integrity. In addition to safeguarding assets and ensuring accurate accounting, an internal control system provides the framework for creating policies and a code of ethics suitable for the company. This system of policies and ethics is important in combatting fraudulent acts, and as Hagerman (1980) asserts, “The rationale for internal control systems is that if employees have an opportunity to steal, they may succumb to the temptation. Therefore, it is important to have a system that reduces this temptation” (p. 73). Without the many facets of protection that an internal control system provides, companies would be left vulnerable and management would have no concrete way of deterring its employees from acting maliciously. Although these policies and ethics can deter fraud, they are useless unless management follows through with imposing them and holding employees accountable for their actions. The Bible explicitly states, “You shall not steal; you shall not deal falsely; you shall not lie to one another” (Leviticus 19:11, ESV). Just as God expects honesty and integrity from man, companies rely on honesty and integrity to run a smooth operation. Management is the key role player in ensuring that their company’s policies and code of ethics are being followed, and the best way to do so is by setting the example. By having management conduct themselves according to the IMA’s standards, employees are more likely to follow suit and respect the company’s rules. Overall, managerial accounting is a tough job when you consider the many responsibilities of the role, which include determining product costs, planning activities, and comparing results. To further complicate matters, management accountants must deal with the threat of fraud and the possibility of unethical behavior daily. It is up to every employee to work hard for their company in an honest and truthful way, and management accountants must demonstrate these values. Promoting efficient operations involves planning, hard work, and honest reporting. The accountant must protect his or her company with reliable reporting and maintaining high ethical standards, and employers must protect and take personal responsibility for their company’s assets and wellbeing. The Bible reminds us that lazy people want much but get little, but those who work hard will prosper, and it is filled with promises of prosperity to those who work hard. God always rewards integrity and faithfulness, and planning and hard work are necessary for promoting efficient operations in a well-run and smoothly flowing business. As the Bible points out, “The soul of the sluggard craves and gets nothing, while the soul of the diligent is richly supplied” (Proverbs 13:4, ESV). God encourages us to be diligent and to work hard if we are to expect His blessings for our effort. References Hagerman, R. L. (1980). accounting in the bible. The Accounting Historians Journal, 7(2), 71- 76. doi:10.2308/0148-4184.7.2.71 Wild, J. J., & Shaw, K. W. (2018). Managerial accounting (Sixth ed.). New York, NY: McGraw- Hill Education.