Role of Accounting and Finance in Decision Making - ALPHA Limited

Financial Decision Making

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
Explanation of role of accounting and finance in ALPHA Limited............................................1
TASK2.............................................................................................................................................1
Calculation of ratios.....................................................................................................................1
Analysis of financial performance of ALPHA limited................................................................1
CONCLUSION................................................................................................................................1
REFRENCES...................................................................................................................................1

INTRODUCTION
Financial decision making is a systematic process in which decision related to
investment, liabilities, shareholders equity, dividend, has been taken in order to achieve
predetermine goal. Financial decision of an entity relates to the choice of the proportion of
sources to finance the investment requirements Manager use this process for improve
profitability and performance of the organization. In order to understand this concept ALPHA
limited has been taken. It is a manufacturing organization which is situated in UK and famous
for their high quality of product and customer satisfaction service. In this report role of
accounting and fiancé sector in process of decision making has been identified and performance
of ALPHA limited and causes of changing of financial performance has been describe.
TASK1
Explanation of role of accounting and finance in ALPHA Limited
Account and fiancé both are different term for business. Accounting is a process of recording,
analysing, classifying collection and communication of data for interpret information to
stockholders, on the other side finance can be defined as management of the flows of money
through an organization whether it will be a corporation, school, bank or government agency.
With the use of accounting information mangers pre4praed financial statement through which
they take decision regarding their future target. Business organizations use both accounting and
financing tools both are interlinked part and to formulate effective strategies and polices both
play essential role in business planning process (Marson, Kerr, and McLaren, 2016). Usefulness
of account and finance regarding ALPHA limited has been described below:
Functions of accounting: It is a procedure which are used for maintain all financial
transactions. It will help in run day to day business activites. For ALPHA limited they hire
accountant which record all the transaction. Main role of accounting is to provide essential
financial information which help in decision making process. There will be two types of
functions
I. Basic function: Following are the basic function

 Collecting and recording all the essential financial transaction by formulating
journal.
 Classifying each transaction by maintain separate account
 Formulation of tra balance and brief summer of all transaction
 Formulating of balance sheet with the use of all accounts for determine financial
position
 Analysis all the data and communicate it to interest stakeholder
II. Managerial function: Managers use accounting function to formulate policies so that
they provides relevant information to their stakeholders following are the managerial
functions:
 Implementation plan: Accounting used to formulate plans and policies for controlling
polices of finance.
 Budget: With the use of various budgetary t. techniques and tools budgets are prepared
for identifying future income and expenses of business activites. To prepare budget,
activity budgeting, rolling budgeting, zero based budgeting process can be used manger
of this company use activity based budgeting method.
 Cost control: Accounting information used to formulate polices of controlling cost
through using various cost accounting process, like, jib costing, process costing, etc
 Information strategies: Main managerial function of accounting is to provides essential
information for evaluation of department performance. Manager of ALPHA use
accounting data in a relevant way (Al Balushi, Locke, and Boulanouar, 2018).
 Calculation of error: With formulation of trial balance accounting use various tools to
cut errors of in operational process.
Functions of finance: Financing is the procedure of identifying, and allocating funds in order to
fulfil day to day requirement for this purpose financial policies are implemented for investment,
procurement and administration of monetary fund’s of ALPHA limited. This organization hire
fiancé manger who formulate all the functions of fiancé, which are describe below:
 Determination of capital: Financial manger decides capital require for operating daily
business operations and also for saving and long term purpose uses.
 Formulating capital structure: It is composition of proportion of capital needed for
business. For this managers identify cost of equity, debts, dividends require.