Finance for Managers Project : Report
Added on 2020-07-23
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Finance for Managersproject
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Purpose and need of financial records..................................................................................11.2: Analyse the techniques required for financial information..................................................31.3: Analysing of usefulness to stakeholders..............................................................................41.4: Difference in management and financial accounting...........................................................61.5: Budgetary control process....................................................................................................81.6: Different costing methods which are used to determine product pricing..........................11TASK 2..........................................................................................................................................12Computation of variances ........................................................................................................12TASK 3..........................................................................................................................................14Calculation by using ARR and Payback period method...........................................................14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................17
INTRODUCTIONFinance is the art to raise funds and effective allocation to attain organisation aims andobjectives. In other words, it is the branch of economics that deals with regulation of funds,financial resources and other necessary assets of an organisation. However, financial managersare responsible to plan and control funds of company which they are going to invest in variousprojects. They are working with the objectives to make use of resources and capital so that shortand long term objectives can be achieved (Brealey and et. al., 2012). These are used for makingeffective decision for making company more beneficial in future period of time. As, in eachcompany or organisation finance is the primary aspects which has to manage and operate in itsdaily business functions. They need to take decision in such a manner that organisation’s performance cannot getaffected. Under this report, a brief essay is prepared on the purpose and requirements of financialrecords. Various techniques are used for recording financial information and its usefulness tostakeholder. It also describe comparison among management accounting, financial accountingand budgetary control process. Some costing methods are also used in order to determine theproduct’s price. The report also covers calculation of variance from available data. Use of ARRand Payback period as investment appraisal techniques for identifying the viability of a project iTASK 11.1 Purpose and need of financial recordsIn an organisation, it has been seen that performance of company is elevated on the basisof its performance that is represented through using financial records. It consists of informationrelated with the costs, expenses, profit and losses which are done by company during year. As, abusiness enterprises it is an utmost responsibility of managers to keep record of business recordand other valuable documents for tax purposes. Keeping track of effective business transactionsand tax statements will be helpful in monitoring the financial performance of concernedbusinesses (Tucker, 2011). Basically, it is important to keep company's written records for at-least five years from the date managers lodge tax returns. Financial records are considered asthose records of profit and expenditure that are kept for tax intent. It consists of pay checkdetails, record of interest or dividends collected during the year and other records of tips,bonuses, cash register receipts and credit card statements. It is a formal record of financial1
transactions of activities and perspective of a business, individuals and other entities. Accurateand reliable information is conferred in a well organised manner and in a form essay tounderstand. There are mainly four types of statements which are prepared by the managers suchas:Balance sheet: In a financial accounting, a balance sheet or records of position is detailsummary of financial transaction those are done during one accounting year (Gitman, Juchauand Flanagan, 2015). It mainly consists of assets, liabilities and other shareholders equity at aparticular point of time. In common term it represent company's net worth.Income statement: It is considered as one of the financial statements of company whichcontains revenues and expenses incurred during a year. It is used to determine that how revenuesof company are transformed into net profit. It present financial outcome of a business for adeclared period of time.Statement of cash-flows: In financial accounting, a cash-flows record are related withthe those transaction which are done in cash by the company. It shows cash and cash equivalenteffects on income generated by company during one financial year. It also identified cashinflows and out flows those are received from various activities such as investing, operating andfinancing.Statement of changes in equity: It is mainly considered as a statement of retainedearnings. It is prepared in order to determine the changes for changing in the capital reserve ofthe company (Fields, 2016). It is applied by sole traders, in which incomes are earned during theperiod is included in starting capital balance.Purpose of financial records: The objective of financial records is to render information regarding financial position,performances and other important changes happen in organisational context. It is all necessary tohave wide range of value that will be more helpful for taking effective decision making incontext to reach at a valid position. It is mostly related with those information that results withvarious operations, financial position and cash-flows of organisation. Such kind of information isnecessary for company to make effective decisions in context of allocation of resources.Requirement of using financial record: There are many prospective investors that usefinancial statements in order to assess viability of a company before making any capitalinvestment decision. According to the financial statements, investors predict future dividends2
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