What is the Managers role, and what benefits are obtained from using an Internal Accounting system?
The internal accounting structure (the chart of accounts) is designed to show how much of the expense of the month corresponds to internal accounting (cost elements), and which of these costs correspond to the indirect relationships of these costs to their activities. If the activity is not to produce, but to provide a service, a company must still know what it costs to provide this service. To accomplish this, the cost elements must be divided into those that are directly related to the activity, and those that are indirectly related to their activity. This important information, designed for management, provides a clear understanding of how costs are related to their organization. Intuitively, this information will help the Sales, Production, Administrative, Service, Purchasing and Planning Manager to see how powerful an internal accounting structure can be toward controlling costs within the company. The manager who is in charge is able to see his departments costs in relation to th
