Managerial Accounting

Managerial Accounting

Wealth Maximization in pursuit of a company’s goal attainment is very important in business. Every business aims to realize many profits and limited loses. In as much as many organizations and companies would like to pursue general goals in the company owner’s wealth maximization, staff salary deduction is not an option. It is entirely unacceptable to reduce the salaries of the staff to build up a company’s reputation and well being. The principal owners of a company are the stakeholders and the shareholders (Sodhi, 2015). The maximization of wealth means that there should be the maximization of dividends to the company owners through time. A company that does not pay its workers well as well as lacking appropriate treatment policies is unlikely to maximize wealth value possible for the shareholders. The staff in a company is the backbone of its well being. They tirelessly work to ensure maximum output for the company. Reducing their salaries is more likely to kill their morale in working diligently. Once they fail to work well, there will be potential risks to the company in realizing its general goals because there will be a reduction in the output (Sodhi, 2015). This reduction will reduce the company’s wealth maximization, and the stakeholders will suffer losses instead of profits.

The attainability of a business’s goal entirely depends on how stakeholders treat other stakeholders of the company. It is essential for all stakeholders to be involved in the company’s project developments. Sidelining other stakeholders in company affairs is unfair and unacceptable. Involving them directly on the beneficiaries of a particular initiative is not sufficient (Sodhi, 2015). By involving every stakeholder in the development projects of a company, there will be knowledge contribution from each stakeholder that will boost the various company projects. As a result of the involvement, there will be maximum wealth maximization amongst the individuals brought about by stable company projects. Once a company has established a firm ground, it would be a milestone in attaining the objectives and goals of the same company. The power and influence of a stakeholder or stakeholders mainly influence the achievements and failures of a company’s project. It is therefore essential to find out how best a particular stakeholder can perform and what capacity he/ she can contribute to the initiative (Sodhi, 2015). Knowing the negative contributions of a stakeholder is significant as it helps in identifying the possible measures to take to avoid the fall of the company by the doings of a single person.

Managers have received better treatment when it comes to providing accounting information than other groups. They are the ones with direct access to this information since they run the business daily. Other groups, however, have come to terms with traditional financial statements as a result of practice (Narayanaswamy, 2017). Managers can identify and capture relevant company information such as bills. They can do so because they have undergone training in this field to provide relevance and skill. They are also able to record collected information systematically. Their ability to run the business in day to day basis has enabled them to Report Company’s data in a manner that fulfills the needs of the company such as income statements (Narayanaswamy, 2017). Their ability to carry out these duties has seen them receive better treatment in providing accounting information because they are relevant to the information. Unlike other groups, they have understandability and a reasonable knowledge of accounting as well as business knowledge which are typical characteristics of accounting information. Unlike other groups, managers are also able to provide a faithful representation of the accounting information that is free from biasness (Narayanaswamy, 2017). Because of their abilities, they are entrusted by the company owners with the privilege of running the company that other groups cannot get.



Narayanaswamy, R. (2017). Financial accounting: a managerial perspective. PHI Learning Pvt. Ltd.

Sodhi, M. S. (2015). Conceptualizing social responsibility in operations via stakeholder resourcebased view. Production and Operations Management24(9), 1375-1389.

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