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Essay / Research Paper Abstract
This 4 page paper defines economics, and also determines how it can be used as a decision-making tool in the field of accounting. This paper shows how the accounting industry could benefit from incorporating economic theory into the decision making process. Bibliography lists 3 sources.
Page Count:
4 pages (~225 words per page)
File: D0_GSEconom.rtf
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Unformatted sample text from the term paper:
incorporate theory and practice that enhance the role of the other, thus producing insight and enhancing the decision making process. It is important to understand this relationship, since there
are specific economic theories that can assist accounting practices. There are many important economic principles that can serve as a decision making
tool in the accounting field. This is because fundamental monetary concepts apply to both fields, and each can benefit from knowledge of the other. For instance, in economics
there is the law of demand, which essentially states that there is an inverse relationship between the price of an item and the quantity demanded of that item (Gregor, 2003).
There are other factors as well that relate to the price of an item and how that price is determined, such as price of related goods, number of customers
in the market, and so forth (Gregor, 2003). In regards to accounting, understanding how the price of a good and/or service was established provides insight into what future action
to take. An example highlights this more specifically. For instance, lets say the Smith Company sells widgets, and prices them
according to what they believe the market will bear. Understanding how the price was set is beneficial to the accountants of the Smith Company because they are able to
look at the current financial situation, and incorporate economic principles to determine what steps the company should take. If they see that from an accounting perspective, the widgets are
selling well are still not making a profit due to associated costs, then understanding the feasibility of changing the price in order to affect profits is a decided benefit of
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