Finance and Funding Task 2: Management Accounting Information

This report, focusing on finance and funding, explores various types of management accounting information, including financial statements (income statements, balance sheets, cash flow statements, and changes in equity) and forecasting techniques. It examines how financial statements are used to analyze an entity's performance, financial position, and cash flow, while also considering market trends and capital budgeting. The report also assesses the use of Management Information Systems (MIS) in decision-making, highlighting their application in analyzing market trends, meeting budgets, managing capital, and achieving objectives. The analysis covers how MIS supports assessing existing capabilities, understanding customer preferences, and making informed financial decisions. The report concludes by referencing supporting literature on finance, leadership, and capital structure.

Finance and Funding

TASK 2

2.1 Explain different types of
management accounting information
 Financial statements
 Forecasting

Financial statements
 Income statements
 Balance sheet
 Cash flow statement
 Changes in equity

Capital
 The current capital raised by an entity will be compared in relation to
the existing business
 The current needs and the obligations of an enterprise are taken into
account to improve its capabilities.
 Capital budgeting tool applied by the management will help in
selecting the best project by an entity.
 The capital raising need will be fulfilled by an enterprise by assessing
the available projects by the business.
 The sources of finance selected by an entity by getting financial
information supplied by the users to know the current requirements of
raising finance.
 The mode of raising finance is based on the current demands of the
business as the best suitable sources will be selected according the
nature of business requirements.

Income statement
 It analyses the profit generated by an entity
 Sales are recorded to reach towards the profit
 Ratios of profitability will help in analysing the
performance

Balance sheet
 Financial position of an entity are identified in
relation to the external market rivals
 Assets and liabilities are identified which helps
in showcasing financial capabilities
 Financial ratios will determine the success or
failure of an entity

Market trends
 It helps in assessing the existing capabilities in
relation to the external market
 Tastes and preferences of customers
 Revision of the existing pricing in relation to
the external environment
 Positive or negative reactions generated in the
existing business

Cash flow statement
 It helps in analysing the available cash in an
entity
 Liquidity traps will be avoided
 Cash inflow will be increased by reducing cash
outflows

Changes in equity
 It is beneficial for the investors
 The equity component will be identified in
order to assess its capabilities

Forecasting
Sales forecast
 It helps in identifying the actual sales
generated by an entity
 Sales units and sales price are estimated
 Higher sales is a clear indication of earning
higher amount of profit

2.2 Assess the use of MIS in decision
making
 Market trends
 Meeting budgets
 Capital
 Meeting objectives