Accounting & Financial Management in Organizational Decision Making

This report provides an overview of accounting and financial management within organizations, emphasizing their crucial roles in reporting and decision-making processes. It explains accounting as a measurement tool for planning budgets and making informed decisions, while financial management focuses on efficiently managing acquired funds to maximize profits and provide a transparent financial picture for investors. The report details various accounting categories, such as cost, management, and financial accounting, and highlights the importance of financial management in optimizing resource utilization and enhancing profitability. Furthermore, it discusses how accounting and financial management aid in preparing reports that offer insights into a company's financial health, investment strategies, and future plans, benefiting both internal and external stakeholders. The report also outlines the key elements and structure of financial statements, including liabilities, assets, equity, expenses, and revenue, along with essential components like the income statement, statement of owner's equity, and balance sheet. The conclusion underscores the significance of these practices in achieving competitive advantages and driving organizational success.

INTRODUCTION TO
FINANCIAL
MANAGEMENT

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
Explain accounting and financial management in organisation in relation with reporting and
decision making......................................................................................................................3
Explain the elements and structure of Financial Statements..................................................5
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The report prepared below gives an idea about working of organisation and how
accounting and financial management Is helpful in decision making. It helps to understand the
usefulness of such activities and operations (Akisik and Gal, 2019). The report gives an idea
about the key elements involved in preparation of financial statements and records. It also
includes structure and key financial terms that contribute in growth and development of firm.
Accounting can be explained as a measurement that is helpful to plan budgets, formulate
decision making for internal as well as external users too. Financial management can further be
explained as managing acquired funds in such a way that it gives more and more profits from
expected areas. It also helps to provide a true and fair picture to people who plan to invest in a
company for a certain time duration.
TASK
Explain accounting and financial management in organisation in relation with reporting and
decision making.
Accounting can be explained as recording of financial transactions in such a way that it
serves a useful meaning towards the organisation. It involves planning about future well in
advance by analysing and predicting the financial records. It can further be explained as a
process of recording, summarizing business transactions related to finance. There are different
categories of accounting as well such as cost accounting, management accounting and financial
accounting (Amagtome and Alnajjar, 2020). Cost accounting is concerned with maintaining
proper records for activities that incur costs and fund out reasons behind such events, in case of
management and finance based accounting it focuses mainly in planning, implementation,
controlling and evaluation of results.
Financial management can be explained as the most efficient and effective to manage
monetary aspects. It focuses on optimum utilisation of resources such as working capital, funds
and fixed assets as well. It also serves as a better tool than others in decision making process.
Main goal of financial management can be explained to increase profitability of the company and
value of the business as well. There are many elements that contribute in preparation of budgets,
financial planning and reporting as well that are linked to financial management. It helps in
controlling wastage of useful resources, forecasting the future operations and actions. It is useful

for internal users for planning purposes and it can be divided in certain categories such as
management accounting, financial accounting and cost accounting as well.
 Accounting and financial management is helpful in decision making as well as it provides
an overview of what is happening in an organisation through the records prepared so far.
It helps to have an idea about the profitability and acquired assets that are available with
the company. Accounting helps to measure liquidity of business and how budgets can be
prepared that would help the company in growth and expansion as well (Geddes and
Schmidt, 2020). Financial management is helpful to analyse future based problems and
issues that affect the working of a enterprise. Accounting measures fund that are being
collected on accrual basis whereas in case of financial management it focuses on flow of
cash. Purpose of accounting is collection of information in such a way that it serves a
meaningful advantage whereas in case of financial management it helps the manager use
the information for taking effective decisions.
 Accounting and financial management help in decision making process as well. In case of
finance it mainly focus on allocating funds of monetary nature at a place that gives
maximum returns, profit and helps to generate adequate revenues as well. Accounting
helps in preparation and implementation of budgets in such a way that helps to fulfil all
goals and objectives well in time. Accounting is helpful for internal as well as external
users too whereas in case of financial management it covers mainline management of
organisation and its linked shareholders. Accounting helps to take decisions by
comparing past results carried out by the company whereas in case of financial
management It is more concerned in making plans and carrying out useful decisions that
prioritize future oriented programs. Accounting helps to monitor plan and control if
anything goes out of way according to plan and financial management also helps to
understand the grounds on which finance based plans are made. It gives a major benefit
for companies to understand the areas that generate maximum profits and investing their
funds at those places (Kamassi, Abd Manaf and Omar, 2020).
 Accounting and financial management help in preparation of reports as a summary that
helps the one who wants to have a thorough knowledge about the functioning of company
in market. It helps the users to understand where company has invested its funds, what it
is planning, its special key areas, its special products and services. Their innovative

techniques used, it also helps them to have a transparency in understanding the
complexity of working. The report thus reflects the success journey of a company and its
net worth at present. It helps to understand their future plans, acquisition and mergers if
any. Accounting and financial management is helpful in managing every area whether
production, material, human resource, inventories, finance or any other. It helps people to
decide whether they must invest in a company or not and what have been its alteration in
figures over years whether positive or negative and how it overcome from certain
hurdles.
Explain the elements and structure of Financial Statements.
Elements of financial statement are grouping of heads under which different assets and liabilities
fall. This will vary with the type of business structure (Omonaiye and et.al., 2019). Elements of
Financial Statements are as follows,
 Liabilities: It are confirmed payments which have to paid in a certain period of time.
Loans which have a specific period of time. For example; Tax payable, wages payable
and capital.
 Assets: There are some elements which are used for the future development or benefits of
which can be derived in the future. For example, stock, fixed assets and account
receivables.
 Equity: It is the investment made by the owner of the business and the remaining part of
the profit which is known as retained earnings.
 Expenses: It is the payment made by the business in order continue its business
operations. For example, utilities expenses, interest expenses and compensation expenses.
 Revenue: It is measured in terms of increase in assets or decrease in liabilities. It is total
turnover of the organisation.
Financial Statement contains following items,
Income statement: Income statement shows revenue less expenses which is known as Net
income. Net is used for combination of both negative and positive. It is maintained on double
entry bases and maintained by an accountant. It is a statement which defines the actual working
of a firm. Investors took into consideration on these financial statements.
Statement of owners equity: It is the equity invested by the owner of the business. In case
of sole proprietor whole of the investment is of one person (Tang, 2020). Total owners capital is

calculated at the end of the year which is adjusted after deducting the amount withdrawn and by
adding the amount further invested.
Balance Sheet: Unlike the two statement it shows the actual position of a business which
includes assets and liabilities of an assets. It is calculated on the last day of the accounting period
of an business organisation. Balance sheet is based on the accounting system which states that
total assets of an business equals to its total liabilities. Other statement than balance sheet is
maintained during the period but balance sheet is adjusted at the end of the year.
Other Financial Statements: A comprehensive income statement is used along with the
income statement which are adjusted to the fair market value.
CONCLUSION
The report asserted above explains the usefulness of accounting and financial
management and how it contribute in the success of a company over years. It is important for
investor, user, customer, employee, manager and owner to asses the financial position of a firm
in market. It also helps to develop a competitive advantage over others that would help in better
working and functioning of business. The report is helpful to give an idea about accounting and
financial management such as procurement of funds, tracking performance of a business,
motivating the team for better work and converting goals into real success. It helps them to work
in one direction that would help to lower down the cost and increase profits.

REFERENCES
Books and Journals
Akisik, O. and Gal, G., 2019. Integrated reports, external assurance and financial performance:
An empirical analysis on North American firms. Sustainability Accounting,
Management and Policy Journal.
Amagtome, A.H. and Alnajjar, F.A., 2020. Integration of Financial Reporting System and
Financial Sustainability of Nonprofit Organizations: Evidence from Iraq. International
Journal of Business & Management Science. 10(1).
Geddes, A. and Schmidt, T.S., 2020. Integrating finance into the multi-level perspective:
Technology niche-finance regime interactions and financial policy
interventions. Research Policy. 49(6). p.103985.
Kamassi, A., Abd Manaf, N.H. and Omar, A., 2020. The identity and role of stakeholders in the
medical tourism industry: state of the art. Tourism Review.
Omonaiye, O. and et.al., 2019. Factors associated with success in reducing hiv mother-to-child
transmission in sub-Saharan Africa: interviews with key stakeholders. Clinical
therapeutics. 41(10). pp.2102-2110.
Tang, Y., 2020. Financial risk and early warning based on Qingdao marine economic
forecast. Journal of Coastal Research. 112(SI). pp.195-198.