Guillermo

Guillermo is in the furniture business and all is going well until another competition entered the industry and suddenly, it is critical to make sound business decisions for the business to survive . Facilitating these sound decisions, determining the best alternatives and communicating financial information require the concept of accounting to be well understood. The paper will provide insight into how Guillermo can use budget and performance reports in making his decision, how ethics may influence those decisions and what accounting information is relevant in the process.

Budget and Performance Reports

Budget according to Zimmerman (1947) is management's formal quantification of the operations of an organization for a future period. It is an aggregate forecast of all transactions expected to occur. Guillermo needs to narrow down what he intends to do. The course material defines budget as is an expression of a quantitative plan of action, an aid to coordinating and implementing the plan. Guillermo needs to have a plan of action in which he can coordinate and implement through the creation of a budget. Creation of a budget requires planning and controlling. In the planning stage, objectives need to be set and outlined about how it will be achieved. Guillermo knows that he is out of the competition and to arrive back, he needs to automate his process, or become a distributor. Automation is an option but is very expensive. He knows that at the rate his furniture business is growing, if a plan of action is not expressed he will have to shut down. Regarding control, this is the process of implementing plans and obtaining feedback to see if the objectives are worth implementing. The course material discusses the four major benefits of budgeting, which are providing an opportunity for managers to reevaluate existing activities and evaluate new ones, helps managers think ahead, helps in communicating objectives, and provide a benchmark to evaluate subsequent performance. Budgeting can sometimes become very tedious. Guillermo already knows that his business is on the verge of shutting down, so he is evaluating other options. He needs to formalize his planning by deciding what plans to adopt and inform his staff about what he plans to do. The performance report of the company will determine what the budget should look like .

Performance report

According to answers.com performance report is a statement that displays measurements of results of some person or entity's activity over some period. In reviewing the performance report of the company, Guillermo needs to look at the score card, which entails how well the company is doing. Attention-directing, which is helping managers focus on operating problems, imperfections and opportunities, and problem-solving, which is a one- time decision like Guillermo deciding to automate his process or not. Guillermo knows the company is not doing well, operation is at a standstill, the opportunity to become a distributor is something to consider and automation is expensive. With the performance report of the company, he is thinking about the role ethics will play in the process in that if he decides to go with automation, the community may not understand and believe he wants to get rid of his workers .

Ethics

Ethics will always be a point of concern in any organization because of all the issues seen with financial organizations . Ethics according to the National Institute of Environmental Health Sciences is a norm for conduct that distinguishes between acceptable and nonacceptable behavior. The business ethics have guidelines that are acceptable behavior by organizations in both their strategy formulation and day-to-day operations. Guillermo needs to understand that distributorship or automation mean reduction in his workforce. How will the community in which he has operated all these years perceive him? Individuals might say he has made his money, established a name in society and is trying to get rid of those who helped him achieved his goal. How will he handle a situation in which none of his furniture is being sold only that of the manufacturer? This brings up the issue of conflict of interest, which is