INTRODUCTION Finance is a pillar of corporate and it deals in investment. It can be easily converted into cash. Identification and analysis of financial problems has been carried out in this report. The purpose of this project is to identify the uses of financial statements in different accounting and to know about the selling price of the product. Budgets are estimated for launching a new product. Net present value, payback period and internal rate of return estimated so that entity can launch the new product (Ishikawa and Takahashi, 2010). In this report, the budget planning is to be described. To get proper financial information of the company it is necessary to estimate the financial position of the company. Investment policies are based on the fair and true financial report of the company. TASK 1 1.1 Financial statement explains the financial activities of the company. By these statements, the performance and stability of the entity can be identified (Fernandes, 2014). Mainly four financial statements is there that is statement of cash flow, balance sheet, income statement and the statement of equity. Balance sheet:It is a most prominent financial document of the company. It contains three elements i.e. assets, equity and liability. Assets are something which is possessed by the businessforexample,land,building,machinery.Liabilityistheobligationforthe organization. It is mentioned in the balance sheet (Lambert, 2012). Some examples of liabilities are creditors, bank loans and overdraft. In short, it can be assessed that equity is the difference between assets and liability. Statement of equity: - It signifies the changes in equity during the period. It includes the sale and purchase of stock and payment of dividend. In this statement, profit and loss generally fluctuates as per the financial position of the entity. Cash flow statement: - It indicates the inflow and outflow of cash and bank as well as describes the movement of cash. It is divided into different segments: - Operating activity represents the first activity of cash in entity. Investing activity denotes the purchase and sale of assets except inventory (Bean and Hussey, 2012). Financing activity describes the sources of funds and uses of find. It is helpful in taking decisions for the business. Income statement: - It signifies the net profit and loss of the corporate and through this it identifies the company's financial position. It is divided into parts: - Income which is earned
by the business in a year such as dividend income. Expenses are that cost which is suffered by the company such as wages. 1.2 Uses of the financial statements: - With the help these statements, it can be determined that whether the entity can sustain in the market or not (Mohsin, 2013). According to the cash flow, the company can take decision that where the investment should be done and cash should be used. Evaluation can be carried out by these statements according to the performance (Director, 2012). It is used by the government for checking the correctness of the payment of taxes. The documents are helpful in taking the long term decisions and are also used as a source of historical records. These assertions are used by the customers, employees, government, competitors etc. Financial accounting denotes the position of the entity to its external shareholders whereas the management accounting is used by the managers for daily operations of the business. Budgeting count includes balance sheet, income statement and cash flow statement while administration rate includes capital budgeting, breakeven point. Significance of management accounting:- 1. Helps in increasing the efficiency of the management and assist in decision making (Vieira, 2016). Management accounting controls the cost of production; it can lead to increments in profits. 2. It aids to identify the risk, and resources should be allocated. Performance of the company is measured by the management accounting. 3. For small business, management accounting is very powerful tool for making better decisions. 4. For achieving the goals, price determination should be done by evaluating, planning and controlling the manufacturing operations (Marciukaityte and Szewczyk, 2011). Substance of financial accounting:- It helps to improve the financial position of the company and provide information related to finance of the entity. Management accounting is helpful in finding the omitted facts and figures. 1.3 Finding the selling price of new ice cream product: Units produced is 8000 Direct material cost is £9000
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