Accounting for Business Executives

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Business Accounting for MBAs & Aspiring Executives

Accounting is quite simply the language of business. Success depends on being fluent in the nuances of the vernacular, with the ability to communicate across all levels of an organization. Effective leaders need a comprehensive understanding of accounting principles, processes, and procedures. This includes knowledge of accounting cycles, analytical tools, and the complex terminology used to define profit and loss.

One of the main aspects of business accounting requires the ability to prepare and analyze various types of financial statements, including:

  • Cash Flow Statement
    Cash flow statements track the sources of available cash, income, and expenses. There are several types of statements including simple cash flow (cash budget), operating cash flow, and financing cash flow. Companies may also report a statement of cash flow to external parties.
  • Liabilities and Owner’s Equity
    These statements outline both current and long-term liabilities (e.g. accounts payable, mortgages, bond payouts, accrued expenses) along with the equity that is left in the company once liabilities are subtracted from the equation. In consumer terms, we know this as net worth.

The knowledge to be able to analyze this type of information is an especially critical executive skill set. Leaders must have the capacity to assess what is going on within their organization, how they got there, and what future trends seem to be in place. You don’t have to be an accounting or financial manager to grasp the importance of a healthy balance sheet for your department, your division, and the company at large.

Some of the most critical concepts you will learn from an online MBA degree program will be those that draw a direct and meaningful correlation between accounting and smart managerial decision making. That includes immersive study in the areas of cost behavior, cost volume profit analysis, and operational and capital budgeting.

All of this financial data is vital to internal and external reporting activities. Full disclosure via annual reports and other shareholder communications is part of doing business. However, financial outcomes don’t have to be the protected domain of leadership alone.

Involving your employees in understanding what the numbers mean and how their work makes a difference to the bottom line can help to improve employee engagement. Research shows us time after time that when employees who feel vested in their company’s success they perform better, which in turn reflects in growth, profits, and opportunity.

Learn more about accounting for business at Ohio University’s Online Master Business Administration with a concentration in Accounting.