(PDF) Financial Decision Making Assessment
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Added on 2021-02-21
(PDF) Financial Decision Making Assessment
Added on 2021-02-21
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FINANACIALDECISION MAKING
Table of ContentsINTRODUCTION...........................................................................................................................3Task 1...............................................................................................................................................3Task 2...............................................................................................................................................6CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................12
INTRODUCTIONThe financial decision making can be defined as a kind of process of decision making inwhich decision is taken as per the analysis of financial reports and statements (Kim and Upneja,2014). Eventually, the financial statements and reports are very crucial in the context of decisionmaking. This is so because financial statements consists all kind of information regarding to thebusiness transaction of companies. The finance function of a company may help the company inevaluating various decisions related to its finance related business activities. In the absence ofproper evaluation of financial statements, it can be difficult for organisations to assess the actualfinancial condition. Herein, the project report Alpha limited company is selected which isinvolved in manufacturing sector. The company is located in UK and started in year 1954. Theproject report consists role of accounting and finance in the respect of Alpha company. As wellas on the basis of given financial statements of above mentioned organisation, various kind ofratios are calculated and interpreted for purpose of analysing the financial performance. Task 1Evaluation of role of accounting and finance within Alpha Limited:In a business organisation, there are huge role of finance department and accountingdepartment as long term survivability and high profits may be earned due to these twodepartments (Kliger and Gilad, 2012). The terms accounting and finance both are crucial for anyorganisation, this is so because both have link with the business activities. It is essential forcompanies to adopt all concept of accounting and finance so that they evaluate the effectivenessof their activities. For understanding purpose, role and importance of terms Accounting andfinance are given in this report in context with a company named Alpha Limited, variousrolesof these terms are as follows:Accounting Function:The term accounting can be defined as a kind of process which is related to the recordingthe financial transaction of companies in a systematic manner (Tridimas, 2012). Basically, theaccounting includes various kind of concepts and principles which are must to follow bycompanies. In other words, the term accounting performs the basic functions of a businessorganisation that are helpful for the company which includes recording, summarising, andanalysis the various finance related transactions. The companies who want to track their financial
position in an effective manner, then it is essential for them to record their financial transactionsas per the rules.Herein, the role of accounting in an organisation shall be evaluated byconsidering the importance of accounting which are mentioned as follows:Beneficial in keeping record: The accounting is very useful in keeping the financialrecords of companies in a systematic way. Due to this companies can find out previousyear's information about their transactions. This is all helps in making importantdecisions. This also help the company in evaluating and considered only monetarytransactions in performing several business operations. For recording these transactions, aaccounts department shall required to implement the double entry system of accountingbecause it gives accurate results to the company like Alpha Limited. Decision making- Another importance of accounting is that it helps the Alpha Limited intaking correct decisions regarding various business operations and regarding recordingthe correct monetary transactions in best way (Correia, Dussault and Pontes, 2015). Forexample, Alpha Limited company requires some data related to its last year operatingprofit, this may help such company in taking accurate decision making related makingbudget for future period for forecasting its operating profits from its future businessoperations based on its past year operating profits. Various field of accounting:The termAccounting has various types that helps the AlphaLimited in various business operations. Some of its types includes managementaccounting and so on. For example, management accounting helps an organisation invarious aspects related to its production system such as for finding accurate cost of itsproducts, calculating correct profits of an organisation. Assist in preparing the financial statement of a company: Accounting plays a vital role inan organisation like Alpha Limited in preparing its financial statements that includesprofit and loss account, balance sheet, cash flow statement and two other things. By thehelp of accounting, a company may record its various monetary transactions related tobusiness that further assist in summarising these transactions in the form of ledgers andtrail balance, at last these ledgers and trial balance helps the company in preparing itsfinancial statements (Govindan, Sarkis and Murugesan, 2015). Finance function:
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