Managing Financial Resources Assignment : Stratford Yacht Limited
Added on 2021-01-01
13 Pages2775 Words133 Views
FinanceLeadership Management
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MANAGING FINANCIALRESOURCES
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Difference between financial and management accounting..................................................11.2 Purpose of different financial statements in profit and not profit organisations...................21.3 Determining groups of stakeholders and their requirement of various information.............3TASK 2............................................................................................................................................52.1 Calculating the ratio..............................................................................................................52.2 Stratford Yachts Limited performance is terms of profitability and liquidity......................6CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTIONManaging financial resources is very important concept in every organisation likeStratford Yacht Limited. The present report is giving brief discussion about concepts of financialaccounting and management accounting with its key differences. In context of managingfinancial resources, financial statements are most essential requirement. Further it hasdetermined purpose of different statements in profit entity and non profit entity. There has beenidentification of different stakeholders and various information which is required for them isevaluated. Furthermore, Financial information of Stratford Yacht Limited has been providedwith different ratio analysis and via that its liquidity and profitability has been determined in thisreport.TASK 11.1 Difference between financial and management accountingAccounting has two branches which are financial and management accounting.Accounting has been elaborated as a process of summarizing, recording and classifying incontext of monetary aspects of all business transactions, events and outcomes are interpreted.The financial position of organization has been viewed by financial accounting to differentparties and in turn, management accounting's main objective is to provide both information tomanager and it must be qualitative and quantitative, which will be helping in assisting decisionmaking and it will tend to maximising profit (Financial Accounting vs Management Accounting,2018). The role of both accounting is to ensure about progress of management for better future.In context of helping top level, management accounting gives broader aspect as compared tofinancial accounting. Financial accounting undertakes responsibility of observing that howcompany is operating financially. Generally it has been created for major stakeholders and somepotential investors who analyse financial accounts and takes decision in context of investing inorganization or not.The risk of financial accounting can be easily observed as compared to managementaccounting. In this context, the best example is of Satyam case in which accounts weremanipulated. Reports are created for internal purpose by management accounting and even riskcannot be easily visible. The key difference can be explained as below: SerialManagement accountingFinancial accounting1
number1.It helps in taking effective decisionsrelated to business.Financial affairs of organization areclassified, summarized, recorded andanalysed.2.It can be applied for performingmeaningful steps and strategy.It gives accuracy and clear picture offinancial affairs.3.The scope is broad.It is pervasive in nature but it is less ascompared to management accounting.4.It is not compulsory.It is compulsory.5.It specifies both monetary and non-monetary information.It specifies only monetary information.6.The format is not specified.The format is specified.7.The reports are framed according torequirement of company.Reports are framed at the end ofaccounting period, generally in 1 year.8.The internal management can onlyuse these reports.Both internal and external parties usethese reports.9.These reports are not published andaudited by statutory auditors(Ashwell, 2014).These reports must be essentiallypublished and even audited by statutoryauditors.10.It is dependent on financialaccounting for taking appropriatedecisions.It is independent.11.The basis of decision makingaccording to historic and predictiveinformation.Only historic information is direct basisof decision making.12.No rule.It should be according to GAAP orIFRS.1.2 Purpose of different financial statements in profit and not profit organisationsThe accounting department compiles all annual documents which are termed as financialreports for elaborating financial position of organization. Financial position of both profit andnon-profit entity has to be created with the help of financial report. The profit organizations isapproaching even focusing more on profit as non-profit organizations lays special focus onresearch, services and programs which are given by organization. The main objective of annualreport is to give normal cash flow of company for both non-profit and profit organizations2
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