Financial Accounting

Post Class reflective exercises

Name: Hitesh Gupta (GMP-17-05)

1. How do you think the knowledge of Financial Accounting impact your expertise (e.g.
Consulting expert, analytics expert, finance expert, sustainability expert etc.)? List some
decisions where knowledge of accounting would be useful?

Answer:

Part A: Financial accounting provides transparency and access to information concerning the
operations of a company. For managers it helps in evaluating the health of a business. Not
only this it helps in making informed decisions though data provided by accounting records.
It also helps in planning the resources, budgeting and acquisition/mergers/investments.
Financial Ratios can help managers to access the financial condition of a company relative to
its peers. It helps manager to forecast the financial decisions

Part B:
a) Planning Resources: Management of a business entails overseeing its ongoing
operations as well as developing long-term plans and guiding it toward its objectives.
Data-driven planning has a higher likelihood of success. Management accounting aids in
trend forecasting by examining past and present trends in the sector and the business.
Today's fiercely competitive marketplaces mandate that a company take advantage of
every chance to outperform the competition. Companies can extract and use the
information that is easily available in their records by using management accounting to
assist them make better decisions.
b) Budgeting: Budgets chosen at random are frequently wasted, improperly allocated, or
insufficient. They might even be exorbitant and commit funds that could be spent more
effectively elsewhere in the business. Examining historical spending data is the most
shrewd method of defining the budget for a time period. A project or marketing effort
could potentially stop if not given enough funding. This might waste the entire expense
or prevent the business from operating at its best. The successful execution of every
business action depends on the planning and allocation of the budget. Any project,
product development, manufacture, or marketing effort should not be started unless
adequate funding has been set aside to see it through.
c) Company’s Performance Analysis: Multiple financial statements are created in
accounting to aid investors or management in making better decisions and verifying the
operation of the business. Numerous financial ratios, like the current ratio and sales
margin ratio, among others, are helpful in assessing the performance of the
organisation.