Small businesses usually are the first to feel the effects of a recessionary economy and generally the last to recover. Two major reasons for these difficulties are managerial inexperience and inadequate financing or financial management.

Small business managers frequently have problems in planning and controlling profits, including revenue generation and cost reduction activities. These important financial methods are especially critical during a recessionary period. The financial problems of small businesses are further compounded if the firms keep poor accounting records and are inexperienced in the management of money.

Required:

The management accountant can help ensure that good accounting records exist in an organization. Discuss the key features that form the basis for a good accounting system that will support management decisions.