Chapter 18, Problem 1RQ

Why is it important for management accountants to understand business strategy?

To determine

Determine the importance of business strategy from the perspective of management accountants.

Explanation of Solution

Business strategy:

Business strategy is a set of actions that is formulated for business for the long run and short run as well.

Importance of business strategy from the perspective of the management accountant:

Formulation of strategy is important for management irrespective of what type of management it is. The management Accountant is responsible for internal data and formulation of cost-effective strategies that are required to make the firm successful in the long run. The structure of organization and strategy has to be in alignment for the purpose of effective execution. Management accountants who can formulate and implement the strategies will be able to create a better design for the accounting system.