P/L Account

Topics: Generally Accepted Accounting Principles, Working capital, Inventory Pages: 31 (8263 words) Published: April 24, 2013

A branch of economics concerned with resource allocation as well as resource management, acquisition and investment. Simply, finance deals with matters related to money and the markets. To raise money through the issuance and sale of debt and or equity  MEANING OF FINANCE

Finance is the study of how investors allocate their assets over time under conditions of certainty and uncertainty. A key point in finance, which affects decisions, is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: public finance, corporate finance and personal finance.  

THE ROLE OF FINANCE. A. COMPARING THE ACCOUNTANT AND THE FINANCIAL MANAGER. The role of an accountant is like a skilled technician who takes measures of a company’s health and writes a report financial managers examine the data prepared by accountants and make recommendations to top management regarding strategies for improving the company’s financial strength. (2) A manager cannot make sound financial decisions without understanding accounting information. (3) The need for careful financial management remains an on-going challenge in a business throughout its life. (4) The most common ways for firms to fail financially are: (a) Undercapitalization or not enough funds to start with. (b) Poor cash flow, or cash in minus cash out. (c) Inadequate expense control.B.THE IMPORTANCE OF UNDERSTANDING FINANCE. (1) The text describes a small organization called parsley patch, begun on a shoestring budget. (2) When the owners expanded into the health-food market, sales took off. (3) Neither woman neither understood cash flow procedures nor did how to control expenses and profits not materialize. (4)They eventually hired a cap and an experienced financial manager, and soon they earned a comfortable margin on operations.Meaning of Financial Management WHAT IS FINANCIAL MANAGEMENT? Financial management is the scientific manipulation and exploitation of our business and financial environment, using a range of statistical, mathematical, and economics tools, with the aim of making the best economic decision, under prevailing circumstances and availability of information and scarce resources.Simply put, financial management is an intelligent quest for optimal use of financial and other economic resources at our disposal. Tax matters are also considered. MEANINGFinancial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.| | DEFINITION| | | |

Financial management is that managerial activity which is concerned with the planning and controlling of the firm's financial resources. Planning, directing, monitoring, organizing and controlling of the monetary resources of an organization.There are 3 important decisions involved... 1. Financing or where do u get money from

2. Investing or where do we allocate funds
3. Dividend or how much to distribute and what to retain...SCOPE/ELEMENTS 1. Investment decisions- includes investment in fixed assets (called as capital budgeting). Investments in current assets are also a part of investment decisions called as working capital decisions. 2. Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby. 3....
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