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Why accounting is part of MBA programs

Accounting is more than knowing how much money you have and how much you owe the government every year. A firm understanding of accounting can help you manage your money to avoid having to give away sizable chunks of equity in exchange for capital. For example, carefully controlling business operations to leverage cash flow can present ways to raise funds necessary for expansion without the need to go to investors. A Master of Business Administration (MBA) degree offers coursework in accounting to give business leaders the knowledge and skills to avoid costly mistakes.

Leveraging GAAP

Before learning how to apply accounting principles to the success of a business, one must learn about Generally Accepted Accounting Principles (GAAP), accounting standards useful for guiding the creation of financial reports and statements. Because accounting works as the language of business, it is important for everyone who practices business to know the basics of the language to avoid misunderstanding. Accounting courses will often teach GAAP to help students recognize each part of a financial statement. GAAP also involves measurement, presentation and disclosure — amounts to be reported, how numbers should be combined and represented and an explanation of important information in a statement.

Applying the knowledge

Cash flow is a company’s net input and output of money. Input comes from the sale of goods and services. Output derives from operating costs like employee salary and inventory. Not all businesses are alike when it comes to cash flow. In a consumer market, unsold or immobile inventory is essentially a business “cost.” And for companies with short product cycles, unsold inventory is counted as a loss. Accounting courses teach how to manage cash flow, supply chains and inventory to improve profit margins.

Searching for the best programs

Traditional and online MBA programs offer accounting courses to help business leaders interpret financial data to evaluate a business’s health, forecast success, highlight opportunities and discover areas of weakness. More advanced accounting courses help students leverage financial data to help make crucial decisions such as reorganizing departments or spinning off a segment of the company to grow on its own.

Accounting has been referred to as the language of business because it provides a fundamental look at how a business is run and managed. Being able to read financial data provides skilled individuals with the ability to forecast cash flow and predict rough patches. The best companies in the world rely on this data to inform operations and manage supply chains, which are vital aspects driving the success of product-based organizations. Online MBA programs offer accounting courses that can provide a strong financial foundation to future business leaders.


Sources:

http://www.referenceforbusiness.com/encyclopedia/A-Ar/Accounting.html

http://smallbusiness.chron.com/accounting-important-start-up-business-52.html


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