Manage Financial Resources

MANAGE FINANCIAL RESOURCES

TASK 1
Assessment one:
1.
(a) Revenue principle- In accordance of this principle, revenue will only be registered if (1) the
method of raising revenue is reasonably completed and (2) the transaction has been carried out.
The old rule is a reaffirmation. The concept of revenue recognition along with the matching
theory is a foundation for accrual accounting. The principle of revenue recognition implies that
income should be recorded when earned, not when it is raised. For example, managing with a
snowflake finishes a group parking lot for the usual $ 100 rate. It can find an unlimited revenue
supply, regardless of whether it increases the allowance by the person- buy for half a month.
This idea is reinforced in the foundation of accounting collection.
(b) The expense principle- The principal difference between accrual reports and cash is the concept
of expense recognition. In order to remember that, if money is received or charged, the accrual
accounting method considers revenues and expenses. Nevertheless, as long as currency is
obtained or charged, the cash management system considers sales or expenses. For instance, a
company spends $100,000 to good and services, that also sells for $150,000 in the coming
season. The $100,000 costs should not be recorded as an expense until the month after the
corresponding income is also identified, under the principle of expense recognition. Anything
else, the present month will surpass the costs by $100,000 and the next month by $100,000.
(c) The matching principle- The concept of matching is one of the fundamental accounting rules. In
the period in which the related profits are received, the underlying principle directs a
corporation to record an expense on its income statement. In the event that a cost isn't
legitimately attached to incomes, the cost ought to be accounted for on the salary proclamation
in the bookkeeping time frame in which it lapses or is spent. In the event that the future
advantage of an expense can't be resolved, it ought to be charged to cost right away.
(d) The cost principle- One of the fundamental principles for accounting is the cost principle. This is
also known as traditional accounting principle. Accounts must be reported at the moment when
the property is purchased in the sum of cash (or the equivalent). In addition, inflation or market
value enhancements will not increase the number registered. (An exception was the change in
market value of a company's short-term equity investment, whose company stock is active in
the large stock exchange.)
(e) The objectivity principle- The concept of objectivity is that a company's monetary statements
are based on solid proof. The purpose of that concept is to prevent financial reports that have

their views and partialities slanted by the management and accounting department of the
organization. The rule of objectivity is the idea that the association's budget summaries are
based on substantial validation. The goal behind this standard is to prevent the accounting
administration and branch from creating tax reports that depend on your feelings and opinions.
For example, if the board accepts that it will receive an immediate payment from an application,
it can cash in the proceeds from the payment, despite the fact that evidence that pretends that
such a result will not occur. An increasingly targeted vision is awaiting further data before
making such a diagnosis.
2.
Financial statements are detailed reports of a company, individual or other entity's financial transactions
and role. Structured and in a simple to understand way, appropriate financial information is provided.
Each organization that sells and offers its stock to the open must document money related reports and
explanations with the Securities and Exchange Commission (SEC). The three fundamental budget reports
are the monetary record and salary proclamation. The income proclamation is a significant report that
helps open a breeze invested individual’s knowledge into all the exchanges that experience an
organization. Below three types of financial statements are mentioned that are as follows:
Profit and loss statement- One of the company's financial statements, which displays income and
expenditure during a given period is an income statement or profit and loss account (also known to as
profit and loss statement (P&L), profit or loss statements, revenue statement, analysis of income
performance, declaration of profit or income statement, assertion of earnings, operating statement or
statement of operational activities). It shows whether the income (also referred to as "top line"), since
accounting for both sales and cost, is converted into net revenue or net profit. It has below mentioned
features that are as follows:
 This statement is made periodically and after planning a organization gets an indication whether
it has profited or gained in the year.
 The income and loss statement just displays the figures without explaining whether benefit or
loss are achieved which does not explain what a corporation performs in plain terms.
 This statement does not show the company's capital costs such as procurement of buildings or
installation of plants and machines. Yet income or expenses from the disposal of capital assets
are expressed in profit and loss accounts.
Balance sheet- It can be defined as a financial statement includes the framework for the calculation of
returns levels and measures the allocation of resources at a given period, and lists the properties,
liabilities and equities of the business at a specific level. It has below mentioned features that are as
follows:
 It is not a time, but a specific day, to file a balance sheet.

 The balance sheet is not accessible after the timeline is written up as a function of the
assumption that it properly represents the company's financial condition.
 The sums of the two sides, i.e. the balance sheet assets and liabilities, must be counted as Assets
= Liabilities and Capital. If not, an error could also occur.
Cash flow statement- A cash flow statement is a financial statement which gives historical information
on all cash inflows obtained from the company's long - term activities and external sources of
investment. A cash flow statement is a balance sheet that provides complete information on the cash
flows an organization receives from its ongoing activities and external sources of risk. In the same way it
encompasses every wave of money that businesses pay for and profit at a given time.
Company financial statements offer speculators and auditors a snapshot of the large number of
exchanges that remain in the business, in which each exchange increases its wealth. Defining revenue is
considered the most natural of the budget shortfalls because it follows the money the company made in
three main ways: through business, business and finance. These three components are called total
revenue.
It has below mentioned features that are as follows:
 The Cash Flow Statement is very vibrant since from the start of the period until the end of the
term the expenditure of cash was recorded.
 The transition of financial roles of structural, acquisition and financial operations can be seen by
an observer. The analysis is based on this transition.
 This statement helps in the calculation of operational cash / cash flows.
How they are all linked and dependent on each other-
Income statement, balance sheet, and cash flow analysis are contained in the annual
statements. The following bullet points show that these three statements interconnect in several ways:
 On the statement of profits, the net profit number is applied to the revenue line item on the
balance sheet, and increases the sum of equity on the balance sheet.
 The net profit statistic is often seen as a cash flow line element in the financial flows of the cash
flows analysis.
 The balance sheet also contains the actual capital position in the cash flow statement.
3.
(a) Written communication- Written communication includes all kinds of interactions using the written
word. Communication is a key to any endeavor affecting more than one individual. There was a