Managing Financial Resources in Business Assignment

Added on - 17 Dec 2019

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MANAGING FINANCIAL RESOURCES1
Table of ContentsINTRODUCTION...............................................................................................................................2TASK 1.................................................................................................................................................31.1 Principles of Costing and Business Control Systems................................................................31.2 Classification of costs residential home has to bear..................................................................51.3 Regulatory Requirement for managing financial resources......................................................51.4 Evaluation of Accounting software............................................................................................6TASK 2................................................................................................................................................72.1 Sources Of Income.....................................................................................................................72.2 Analysis of Factors affecting availability of Finance................................................................82.3 Reviewing types of Budget........................................................................................................92.4 Decision Making ways for expenditure.....................................................................................9TASK 3..............................................................................................................................................103.1 Preparation of Cash Budget.....................................................................................................103.2 Fraud Management..................................................................................................................113.3 Measures to control and monitor Budgets...............................................................................11TASK 4...............................................................................................................................................124.1 Identification of level of service..............................................................................................124.2 Analysis of relationship between level of service and associated costs..................................134.3 Effect of Financial considerations on residents.......................................................................134.4 Financial systems to improve the services...............................................................................14CONCLUSION..................................................................................................................................15REFERENCES...................................................................................................................................16Index of TablesTable 1: Calculation of per unit cost for resident in a month..............................................................6Table 2: Functions, advantages and disadvantages for various software............................................8Table 3: Cash budget for 3 months ending December, 2016..............................................................112
INTRODUCTIONFinance is very crucial part of business and therefore managing is the important function.Functioning of a care home has several activities involved and costs associated with them. Thisreport closely deals with costs to be undertaken and its broad classification. Further budgeting isapplied and its importance are explained in decision making. It demonstrates the budgeting inplanning expenditures and managing and controlling them to provide effective services andmaintaining existing customers. Planning is praised in management accounting and decisionmaking. This report further creates the understanding the efforts of financial planning inmanagement accounting and reflects its contribution towards success of the residential care unit.TASK 11.1 Principles of Costing and Business Control SystemsPrinciples of accountingCosting is based on fundamental principles and guidelines which leads to extract meaningfulinformation. Major principles are explained below:Cost effect relationship:Cost is recorded on the basis of cause and effect relationship.Cause relationship drives the allocation of cost on the basis of its nature.This principaldefines that figures are analysed according to the nature of the cost and it is necessary toallocate these on the basis of the relationship. It explains that cost is required to be shared bythose units which is passing through the particular department. For instance; if retailer ispurchasing the material from whole seller, it will record the transaction at cash price thatactual paid by the retailer. Cost would be equal to the amount which is paid in thetransaction.Cost is charged after the occurrence: Costing follows the principle that cost is chargedonly if the product is produced. For example: normal loss is included in cost of only thoseproducts concerned and not on all the products to be manufactured.This principal says thatonly those costs are to be included which are actually incurred. For instance; unit cost cannot be charged with selling cost because some of them activities are related with theproduction.Abnormal cost are charged in costing:The cost which are abnormal or non routine innature are not charged to the production. Since these are not directly related with theproduction process of the entity. For example: In case of care unit is fire occurs then damagecost will not be charged to cost centres rather it will be debited to Income Statement.Somecosts are not related to the production such as fire, riot, accidents etc. These are distorted3
cost figures that can mislead the management. So this principal says that only normal costsare to be charged and abnormal costs are not charges to costing.Past cost not taken into future: It depicts that cost of particular period are treated as cost ofthe that period itself and cannot be deferred. As it will unnecessary burden the future costand display blurred picture. However advertisement is an exception as it involves huge costand benefits will be derived in future as well therefore deferred in future period as well.Thisprincipal says that past costs are not to be included in future costing calculations, it cancreate misunderstanding.Business Control SystemSome of major Business control systems which assists organisation are depicted below:The Procurement ProcessDefining the Business Need: Objectives of the requirement of the system should be clearlycommunicated to the supplier. It deals with the need which laid the comapmny to thinkabout control system. Care unit would like to go online for greater access therefore itdefined the need(Ndolo and Njagi, 2014).Development of procurement strategy: Procurement strategy is to wisely decided forapplication of system. There are various options available for Care unit to apply controlssuch as waterfall method, pilot method etc. which offers wide range of options to the client.Supplier Selection and Evaluation :Selection of supplier is a tedious task and requires lotsof tests and decisions. Vendor can be selected on basis of its past records or performingbenchmarking or checklist test on the services offered. Point scoring method can be appliedto give point to various vendors and selecting the best among the rest.Negotiating and Awarding the contact :Once the vendor is selected negotiations shouldbe entered in terms of quality of services or in cost measures to improve the efficiency ofmoney invested(Miller and Rice, 2013). Further order and scheduled delivery of modules tobe pre determined for care unit for effective and timely set up of systems.Induction and Integration :Terms of delivery should be clearly mentioned and reviewedto avoid any default on supplier side. Care unit should also controls and check on timelybasis that agreed quality is offered and no compromises are entered with contacted terms.Management Control System4
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