Financial Management

The information provided in the financial statements under the financial accounting system is used by auditors to analyze the businesses financial position. Maintaining an accounting standard for report for external users is al... ... middle of paper ... ...nancial information and how to analyze the information reported. While each type of accounting is necessary, they are aimed at different audiences and have various standards that are necessary to adequately evaluate the financial position of the company. Financial accounting is primarily the function of putting financial statements together in accordance to GAAP so that the information can be viewed and analyzed for external users, including auditors and shareholders. Managerial accounting is the process of compiling financial statements that will aid the management team in making decisions for the organization.

QUESTION 1 Financial Accounting is an accounting system that tries to meet the needs of the various user groups especially for external users. It’s overall purpose is to construct financial reports that provide information about a firm's performance to external parties such as investors, creditors, and tax authorities. Types of financial reports used are Statement of Financial Position, Statement of income and Statement of cash flow. Users of the information are stockholders, government, investors and tax authorities. Management Accounting is an accounting system is used for internal decision making.

This paper will discuss the information found in the financial statements such as, balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity. The financial statements will show the relation to planning, controlling, and decision making. Also, the paper will discuss some the reports and ratios that can be developed by analyzing the statements. The statements mostly used by managerial accounting are: budgets, forecast, variance reports, and ratios to name a few. Planning, Controlling, Decision Making We should begin by planning, controlling and decision making.

1.1 Role of accounting Accounting is a system for measuring and summarizing business activities, interpreting financial information, and communicating the results to management and other stakeholders to help them make better business decisions. Accounting information helps users to make better financial decisions. Users of financial information may be both internal and external to the organization. Internal users (Primary Users) of accounting information include management, employees and owners. Accounting information is presented to internal users usually in the form of management accounts, budgets, forecasts and financial statements.

As we take a closer look at reports, managerial accounting use cost of production reports for decision-making. These comprise preparing detailed plans, budgets, forecasts, and performance reports for internal decision makers. Managerial accounting aids managers plan and administrate the company's operations. Accountants prepare budgets to communicate management's goals in financial terms by identifying, measuring, accumulating, analyzing, interpreting, and communicating information. After a budget has been adopted, performance reports compare actual results with the budget.

1.1.6 Importance of financial statements The financial statements are a mirror which reflects the financial position and operating strength or shortcoming of the concern. These statements are useful to management, investors, creditors, bankers, workers, government and public at large. Following major uses of financial statements:  As a report of stewardship.  As a basis for fiscal policy.  To determine the legality of dividends.

Accounting is the dominating science here, as it studies collection and transmission of financial information. Basic steps of accounting information system are: information identification, its recording, data analysis and information reporting. Depending on the objective of analysis appropriate methods and techniques should be selected. There are several primary objectives in my analysis of Gazprom’s performance. They are: identification of financial position, revelation of the changes in the financial status for certain time periods and discovering of the main grounds for these changes.

The Usefulness of Financial Statements The primary means of communicating the financial effects of organizational activities and transactions of a company to outsiders is the financial reporting system. This reporting system includes communicating financial information through annual financial statements, as well as through reports filed with the Securities and Exchange Commission, voluntary forecasts, and other financial and nonfinancial releases. Financial statements are the main source of financial information conveyed to parties external to the company. The full set of primary financial statements consists of a balance sheet, income statement, and statement of cash flows. External financial statements have a general purpose and are designed to meet the needs of investors, creditors, and other users of the external reports.

Annual report analysis of Kotak Mahindra Bank Limited Financial statements provide an overview of a business' financial condition in both short and long term. They help in understanding the past performance of the company and making future predictions about the company. It thus helps us to look beyond the profit figures. There are 3 basic financial statements. They are:- Income Statement Balance Sheet & Cash Flow Statement Purpose of financial statements "The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions.

1.1 Role of accounting Accounting is a system for measuring and summarizing business activities, interpreting financial information, and communicating the results to management and other stakeholders to help them make better business decisions. Accounting information helps users to make better financial decisions. Users of financial information may be both internal and external to the organization. Internal users (Primary Users) of accounting information include management, employees and owners. Accounting information is presented to internal users usually in the form of management accounts, budgets, forecasts and financial statements.