3.How finance is interlinked with accounts. What will be the effect if one fails?

Ans3
Accounting is concerned with recording of business transaction of a
company and presenting it in the form of profit and loss account to show the
profit or loss of the company during a year and also it involves preparation of
balance sheet which reflects the financial position of the company at a
particular date.

Finance is a broader concept and it makes use of all the data which

is presented in the accounting like profit and loss, balance sheet, cash flow
statement to make finance related decision like how to raise money for future
projects of the company, how to utilize the resources of the company in order
to efficiently and effectively produce the good so that company makes profit.

Finance therefore is a future looking concept which makes use of past data in

accounting to make decision related to future. Without
accounting data finance will find it difficult to make above decisions and
also accounting will not be effective if it is not used along with finance.

The effect if one fails:-

1) The analyst needs to bear in mind, therefore, that any ‘creative
accounting’ will dishonestly attempt to inflate reported profits, and in
particular earnings per share, and also to report profits at the expense of
the balance sheet. This may result in profits being reported without an
equivalent amount of cash being generated. Cash is ultimately more
important than profits, since it is cash that pays interest and dividends.
The lack of it causes companies to fail.