Chapter 1, Problem 1RQ

According to some estimates, the volume of electronic commerce transactions exceeds $3 trillion. Business-to-business transactions account for almost half of this amount. What changes do you believe are in store for managerial accounting as a result of the explosion in e-commerce?

To determine

Explain about the changes in store for managerial accounting as a result of the explosion in e-commerce.

Explanation of Solution

Managerial accounting: Managerial accounting is a system, or a process of collecting and organizing, classifying, and analyzing the financial reports, and communicating the relevant information to the managers of the company to achieve the objectives and goals of the organization.

• The explosion in e-commerce will create an impact in managerial accounting in significant ways. Drastic decrease in paper work is one of the effects. Millions of transactions conducted electronically among businesses without hard-copy documentation. Along with this method comes the significant issue of information security while communicating about business transactions.
• It is the duty of businesses to find out ways for protecting its confidential information in its own computers. But at the same time, it must share certain information that is required for completing the transactions.
• Another effect of e-commerce is that the business transactions can be conducted with dramatic speed. Furthermore, there is dramatic change in the procedures of managerial accounting in addition to these business-to-business transactional issues. For example, e-budgeting, this is the enterprise-wide and electronic completion of a company’s process of budgeting.