A NEW ACCOUNTING FRAMEWORK

BERNALES, ELIZABETH N. FMA31FC1 FIN 004

LOPEZ, ELLAINE M/W/F 5:30-6:30

According to what we've read, Cesar A. Mansibang said that

accounting is a process and a communication model for decision making. The process

is underpinned by generally accepted accounting principles (GAAPs), assumptions,

methods, and judgments: all these helps make financial information easily understood

and applied. In addition, accounting is treated as the language of business, achieved

through a process that is circumscribed by principles known as the GAAPs. Also,

accounting is the measurement, processing and communication of financial information

about economic entities such as businesses and corporations. Accounting was called

the language of business and it measures the results of an organization's economic

activities and conveys this information to a variety of users including investors, creditors,

management and regulators. Practitioners of accounting are called accountants.

According to some resources, accounting information systems are designed to support

accounting functions and related activities. Cost accounting. Of course the main reason

of an entity or a firm is to maximize profit and to minimize the cost. Doubtlessly, cost

accounting is one of the most important accounting information to be learned and to be

applied appropriately. Doing such, an entity can evaluate the opportunities and be able

to choose the most optimal solution on how to efficiently and effectively acquire

materials from their respective suppliers. The CAM Accounting Model consists of five
elements namely: the technical process of generating, accumulating and summarizing

financial data; analysis of data; communication; decision making; and results feedback.

Its focus is the managerial nature of accounting, guiding us, the students, to the

problem solving and decision making that is critical in management work. This is a

different approach offered by the CAM Accounting Model, instead of belaboring on

debits and credits. We do find this useful for non-accountants since you don't have to

deal with debits and credits any longer. Since some of non-accountants aren't really

familiar with it, they can now get rid of it in a way that they will still be able to do these

stuffs correctly.

Accounting is also defined as the language of business, it portrays many

messages. Accounting and managers must ensure that the financial reports provide

timely, accurate, and reliable data about the company. Full disclosure must be upheld to

help the users understand the financial data. Accounting must communicate information

effectively so that the users are appropriately guided. This means that the information

presented should be understood in terms of structure and meaning. It should also be

expressed in friendly terminologies and words, instead of jargons, to inform, advise,

persuade, and generate feedback. The analysis and interpretation of financial data help

managers to make informed decisions. Since many users of financial data are non-

accountants, it is important that the data are analyzed using practical and layman’s

terminologies. These terms amplify, clarify, and answer questions substantially rather

than raise new questions. The managerial tasks if diagnosis, evaluation, and prediction

are achieved through extensive and effective analysis of the financial data cause and
effect. The calculation of growth pattern, relationship, composition, and correlation is

important. But the interpretation of casual relationship is even more important to aid in

identifying problems and developing management options.

Accounting is a service activity. It uses words and symbols to communicate

financial information useful for decision-making. Accounting is used for proper decision-

making and policymaking. The business manager does not need to have a very

technical grasp of the concept of debit and credit. What he or she should have is the

understanding of how to interpret and translate these accounting principles to decisions

in business. Financial and critical analysis should be given more importance since

accounting is an important tool to make proper findings and conclusion to a given

business problem. The use of actual business scenarios would aid in teaching how a

manager should react in a specific situation and how he or she should interpret the

given accounting data. Financial information is needed before any economic decision is

made. Financial accounting information focuses on actual events. Accounting for

business managers should be taught in a way that would give the business managers a

clear grasp on how to decide using the numeric tools at hand. The interpretation of

financial statements and documents is vital in every aspect of business. The ultimate

objective of accounting is to provide information in reports, which can be used by

internal and external decision makers. The teaching of accounting to non-accountants

should focus on the fact that accounting is the language of business. The emphasis

should be placed on the training of business managers and leaders. The goal is to

make the student a critical and rational manager and not accountants. Accounting
should be used as a management discipline that encourages critical analysis, effective

communication and rational decision-making.