Financial Decision Making: Accounting and Finance Functions of Alpha Ltd

Financial Decision Making

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Accounting and finance functions of Alpha Ltd.........................................................................3
TASK 2............................................................................................................................................7
Calculating ratios........................................................................................................................7
Commenting on performance of Alpha.......................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Accounting and Finance functions are cardinal to any organisation. Financial decision
making is a sound approach to weighing the pros and cons of a decision which relates to funds.
The decisions taken by the finance manager are very crucial. The following Report is based on
Alpha manufacturing company based in uk which started their operations back in 1954.The
current report will outline the importance of accounting and finance functions along with all the
ratios which analyses the performance of Alpha Ltd. Alongside financial ratios will critically
examine financial statements which will be used to evaluate profitability, analyse trends,
evaluate borrowing capacity of the Alpha ltd.
TASK 1
Accounting and finance functions of Alpha Ltd
ACCOUNTING DEPARTMENT
The accounting department is responsible for billings, Payroll, Cost Accounting, supplier
payment, preparing financial statements and many more. The accounts department is also
responsible for recording all the cash flows, both in and out for the company. Accounting
department is managed by controller who reports to chief financial officer of the Company.
Accounting department maintain adequate internal controls within the organization to safeguard
valuable resources also keep track of costs incurred by the company and anticipate business
needs.
Functions of Accounting Department
FINANCIAL ACCOUNTING FUNCTION
Financial accounting primary functions is to record and measure all the business activities
of the company and convert that information into financial statements through which investors
can make financial decisions for the betterment of the company. The primary beneficiary are
investors, creditors & lenders. The functions include
Systematic Record
The important function is to record financial transactions systematically for the business.
Recording of each and every financial transaction of business must be according to the financial
standards.
Analysing and summarising

Financial accountants show the correct financial position of the company with the
analysing and summarising of the financial transactions recorded (Zéman, 2019). With this profit
and loss of business in a financial year can be obtained.
Communicate results
The financial accountants must provide report of financial position of the business in the
financial year to all the shareholders & owner of the company, Government, investors and all
other related parties.
Meeting legal requirements
Legal requirements like auditing of the books from external auditor & tax liabilities as
per the taxation system of the country should be meet.
MANAGEMENT ACCOUNTING FUNCTION
Management accounting refers to branch of accounting that includes planning and
controlling of business operations. It helps the Alpha Ltd. management in formulating policies
by collecting information and processing it for further use. This helps in making quality
decisions for the business in the competitive business environment.
Functions of Management accounting
Planning
Planning helps management of Alpha Ltd. to formulate the business objectives which
can be achieving of desired profits for a particular year, steps to reach the targeted profit.
Decision making
For decision making the Alpha Ltd. management uses statistical and accounting
information so that the decision taken benefits the interest of the business (Ross, Shi and Xie,
2019). For example, business uses cash flow forecast and projected reports, burn rate, comparing
costs vs budget for the project etc.
Controlling
Controlling include measuring and monitoring actual results to make sure that goals and
plans of Alpha Ltd. are achieved. It checks the expected performance of a business.
TAX FUNCTION
Tax accounting function deals with the preparations of tax returns and tax payments. It
also takes in account to work with taxable income of Alpha Ltd. along with any deductions or
any tax benefits & exemptions (Muda and et. al., 2018). There are two items which must be