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Step 1 of the process is identifying the objectives of the business in accounting. Objectives tend to be framed in broad terms and, once established, they are likely to remain enforce for a long period, say, five or ten years. As we shall see later, a key objective of private- sector businesses is to increase the wealth of their owners. It is important, therefore, that we have suitable financial indicators, such as profit, that can be used to help set the objectives.N Step 2 is considering the various options available to achieve the objectives of the business. To achieve the objectives that have been identified, a number of possible options (strategies) may be available. Each option must be considered carefully to see how closely it fits with the objectives that have been set, and to see whether the resources to pursue the options are available. Financial information should help to quantify the likely costs and benefits associated with each option in financial terms. As a result, we should see more clearly whether an option is worth pursuing with the accounting homework help.N Step 3 involves the preparation of long-term plans, based on the most appropriate option available. These long-term plans set out how the business will work towards the achievement of its objectives over a period of, say, five years. Financial information should lie at the heart of these plans. It is important to set out the financing and investment requirements for the business and the expected levels of sales revenues and expenses over the planning period. By doing so, the managers will have clear, quantifiable targets to be achieved.N Step 4 is the development of short-term plans, within the framework of the long term plans. The business will usually prepare short-term plans (budgets) covering a period of one year. The role of budgets is to convert the long-term plans into action able blueprints for the immediate future. The role of financial information here is basically the same as in the third step.N Step 5 in the process involves collecting information on actual performance. However well planned the activities of the business may be, they will come to nothing unless steps are taken to achieve them. The process of ensuring that planned events actually occur is known as control. To exercise control, there must be a timely flow of information available to managers to help them compare actual performance with earlier planned performance. As many aspects of planning will normally be expressed in financial terms, information regarding actual performance, which is required to exercise control, should also be couched in financial terms. This will make it easier for managers to compare differences between planned and actual performance, and to assess the extent to which plans have been achieved.N Step 6 is responding to divergences from planned performance with appropriate action. Where things have not gone according to plan, the size of the differences between planned and actual performance, expressed in financial terms, can help managers to set their priorities for action with accounting homework help.N Step 7 is to revise the plans or budgets, if necessary. This will involve going through the main steps of the process once again and so will require the financial information already identified.
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