√ Definition of Behavioral Accounting, Benefits, Aspects, Scope and Problems
Definition of Behavioral Accounting, Benefits, Aspects, Scope and Problems – In this discussion we will explain about behavioral accounting. Which includes the notion of behavioral accounting, the benefits of behavioral accounting, behavioral accounting aspects, the scope of behavioral accounting and behavioral accounting issues with complete and easy discussion understood.
Definition of Behavioral Accounting, Benefits, Aspects, Scope and Problems
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Definition of Behavioral Accounting
Behavioral Accounting is an accounting science which is a combination with social sciences. Behavioral accounting is a science that explains the effects of human behavior so that it can affect accounting data and business/business decision making. Also vice versa how accounting can affect human behavior and also business decision making.
Another understanding of behavioral accounting is part of the accounting discipline that studies the relationship between behavior people and accounting systems, as well as the behavioral dimension of the organization in which people and accounting systems exist and are recognized existence.
Benefits of Behavioral Accounting
The benefits of behavioral accounting are very much needed when making decisions in the accounting system. Benefits perceived by a manager or management team. Which emotion/habit to accounting data has an effect on the decision to be taken.
Important Aspects of Behavioral Accounting
According to Schiff and Lewin (1974) there are five important aspects of behavioral accounting, namely:
Organizational Theory and Management Behavior
Modern organizational theory is concerned with discussing the behavior of the corporate entity components as a basis for understanding their actions and motives. Modern organizational theory sees that there is interaction between organizational elements to support organizational goals. Organization is a complete entity.
More specifically, modern organizational theory concentrates more on organizational goal-direction behavior, motivation, and problem-solving characteristics.
Budgeting and Planning
The focus of budgeting and planning is the formulation of organizational goals and the interaction of individual behavior. Some of the important dimensions in this area are the process of participatory budgeting, the level of difficulty in achievement of goals, level of aspirations, and there is a conflict between individual goals and goals organization. Alignment between individual goals and organizational goals becomes a managerial framework in organizational development.
Decision-making
In decision making it focuses more on theories and models regarding decision making. There are normative theories, paradoxes, and descriptive models in decision making. Normative theory is how people should make decisions.
Paradox is something that contradicts normative theory, and the descriptive model discusses what happens when people make decisions based on existing empirical facts. What information (subject matter) is used in making decisions. The information used is still accounting information.
Control
Aspects of control is very important in an organization. The larger the organization, the more intensive control measures are required. Control is often associated with measuring individual performance and adaptation to the environment.
Important dimensions of control are organizational structure, internal control, decentralization-centralization, and the relationship between administrative hierarchies. The latest development in internal control is the recognition of the control environment as one of the keys to an organization's operational control.
Finance report
Behavioral aspects of financial reporting include income smoothing behavior and the reliability of accounting information and the relevance of accounting information to investors. Income smoothing is part of earnings management because management has special information for its own interests.
Scope of Behavioral Accounting
Behavioral accounting is part of traditional accounting which has a role in collecting, measuring, recording and also reporting financial information. This is an accounting dimension, which is specific to human behavior and also its relationship to the implementation of accounting information systems.
In behavioral accounting, human behavior becomes a consideration in making decisions. Because of the social dimension of the organization. So that it becomes an important element that must be present in every report by an accountant. The following is the scope of behavioral accounting:
- Studying the influence of human behavior on construction, buildings, and the use of information systems that are applied in companies and organizations, which means how management attitudes and leadership styles influence the nature of accounting and design controls organization.
- Studying the influence of accounting information systems on human action, which means how the system accounting influences performance, motivation, productivity, decision making, job satisfaction and work The same.
- Methods of explaining and predicting human behavior and strategies for changing it, which means how accounting systems can be used to influence behavior, and how to address resistance.
Behavioral Accounting Problems
In its application there are many problems that can be solved or caused by behavioral accounting. There are three main issues related to behavioral accounting research, namely:
- Decision making by auditors and accountants
- Influence on the functions of the accounting system such as budgeting, auditing, and so on.
- Effect of results/outputs such as accounting information and so on.
Thus has been explained about Definition of Behavioral Accounting, Benefits, Aspects, Scope and Problems, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read other articles.
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