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The Contents of an Accounting Scorecard

Keeping a record of expenses is not only about balance sheets. It should be done in the manner of an accounting scorecard to make it organized and structured.

Every line of business should have an organized way of bookkeeping. This is the only way to determine clearly if the business is earning or not. Bookkeeping has evolved into something of higher technology, and yet, the essence is the same. The spreadsheets contain the assets and liabilities and expenses of the company and this will also show any assets that are liquidated. Debits and credits are there as well. In essence, there may have been changes and yet the principles are still intact. What technology made easier is for the calculation of these numbers. There is no more need to manually compute things so the margin for error is lesser. As in every company, one has to know the basics of accounting and measure its effectiveness through checking the process against an accounting scorecard.The first thing that the scorecard should contain is the revenue of the company. Definitely, this is the net income of the company once all necessary costs have been subtracted. These costs include capital for raw materials, salaries of employees, non-productive hours, and other non-tangible items that the company needs to pay for. A simple glance at these numbers will show a business leader whether the revenue is satisfactory or if there is a potential area of improvement and cut costs.Another thing that needs measurement in the scorecard is the yield. A sad fact of reality is that several mangers look at sales, and yet, they do not look at what could have been made if the wastes and defective products are controlled. For example, if a single cloth can make two shirts, the ideal ratio or yield should be 1:2. However, some are only able to produce one shirt out of this cloth due to human errors. These are the processes that need to change so the number of defects can be reduced. Once this is addressed, a significant change will be very visible in terms of yield.Next, the scorecard should show information on product costs. This figure will show managers if the company is within the recommended expenditures and if the sales are actually converting into income once raw materials are converted into output. If a product is not likely to sell, and this is only adding weight to the companyís expenses and not on the income from profit, this product may need revamping or may even need to be totally eradicated.Of course, budget should always be present in any given scorecard that has something to do with accounting. This gives managers a high-level picture as to whether the company is overspending on overhead expenses or if the company is not spending enough on its processes to come up with quality products and services.IdeallyFind Article, an accounting scorecard should not be very complex. It should be easy to understand so there is not much analysis that needs to be done. The scorecard is something that was designed to tell executives of what is going on at a simple glance. Keeping it simple is better.

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