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Assignment Title
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Table Of Contents
Introduction................................................................................................................. 3
PEDBM Assignment....................................................................................................3
Conclusion.................................................................................................................. 8
Reference....................................................................................................................8
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Introduction
Financial management is the process of managing an organization's financial
resources to achieve its goals and objectives. It involves planning, organizing,
directing, and controlling financial activities such as budgeting, forecasting, cash
management, and risk management. Financial management is essential for the
success of any organization, whether it's a small business or a large multinational
corporation. Effective financial management helps organizations to make informed
decisions, allocate resources effectively, and achieve financial stability and growth. It
also helps organizations comply with financial regulations and reporting
requirements, communicate with stakeholders, and manage risks. In today's fast-
paced and competitive business environment, financial management is more
important than ever before, as businesses strive to maximize profits, minimize costs,
and achieve sustainable growth.
PEDBM Assignment
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(3) Post to ledger: The next step is to transfer the journal entries to the
appropriate accounts in the general ledger. This involves creating a
separate account for each type of asset, liability, equity, revenue, and
expense.
(4) Prepare trial balance: Once all the transactions have been journalized
and posted to the ledger, a trial balance is prepared to ensure that the
total debits and credits balance. Any discrepancies are identified and
corrected before moving on to the next step.
(5) Adjusting entries: Adjusting entries are made at the end of the
accounting period to record any transactions that have not been
recorded yet, such as accrued expenses or prepaid expenses. These
entries are necessary to ensure that the financial statements accurately
reflect the company's financial position and performance.
(6) Prepare financial statements: After adjusting entries have been made
and the trial balance is correct, financial statements are prepared.
These include the income statement, balance sheet, and statement of
cash flows. The income statement shows the company's revenue and
expenses, while the balance sheet shows its assets, liabilities, and
equity. The statement of cash flows shows the company's sources and
uses of cash during the accounting period.
(7) Closing entries: Finally, closing entries are made to transfer the
balances of temporary accounts, such as revenue and expense
accounts, to the permanent accounts on the balance sheet. This resets
the temporary accounts to zero and prepares them for the next
accounting period.
III. Accounting and finance are two related but distinct disciplines that are
both essential to the successful operation of a business. While they share
some similarities, there are some key differences between the two.
Accounting is the process of recording, classifying, and summarizing
financial transactions in a systematic manner. The purpose of accounting
is to provide accurate and timely financial information to help business
owners and managers make informed decisions. Accounting involves
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tasks such as bookkeeping, preparing financial statements, analyzing
financial data, and ensuring compliance with financial regulations.
Finance, on the other hand, is concerned with the management of money
and investments. It involves analyzing financial data, evaluating
investment opportunities, and making decisions about how to allocate
resources. The goal of finance is to maximize the value of a business by
making informed decisions about investments, financing, and risk
management.
The main difference between accounting and finance is that accounting is
primarily focused on providing accurate and reliable financial information,
while finance is focused on making strategic decisions about how to
manage and allocate financial resources. Accounting is also more
concerned with historical data, while finance is focused on forecasting and
planning for the future.
In summary, accounting is a subset of finance that deals with the accurate
recording, classification, and summarization of financial transactions, while
finance is a broader discipline that involves managing and allocating
financial resources to maximize business value.
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the company's owners or shareholders, as well as any profits that the
company has retained.
In summary, assets represent the resources that a company owns, liabilities
represent the obligations that it owes to others, and capital represents the
residual interest in the company's assets after all liabilities have been
deducted. Together, these three components make up a company's balance
sheet, which is an important tool for analyzing a company's financial health
and performance.
In summary, financial management is essential for businesses to plan for the future,
allocate resources effectively, analyze financial performance, manage risks, comply
with financial regulations, and communicate with stakeholders. Without effective
financial management, businesses would struggle to achieve their goals and
maintain financial stability.
Conclusion
Financial Management is a crucial aspect of running a business. It involves the
effective management of a company's financial resources to maximize profitability
and ensure long-term sustainability. Financial Management comprises various
components such as assets, liabilities, accounting cycle, accounting and finance,
and cost of sales. The assets of a company include all the resources that it owns or
controls and that can generate future economic benefits, whereas liabilities represent
the obligations that a company owes to others. The accounting cycle is a systematic
process of recording, classifying, and summarizing financial transactions, followed by
the preparation of financial statements. Accounting and finance are two related yet
distinct disciplines, with accounting focused on providing accurate and timely
financial information and finance dealing with the management of money and
investments. The cost of sales represents the cost of producing or acquiring goods
sold during a particular period. The balance sheet of a company comprises three
fundamental components, namely assets, liabilities, and capital. In summary,
Financial Management is critical for a business's survival and growth, and it requires
the effective management of its financial resources to achieve its goals.
Reference
(1)Financial Management: Theory and Practice by Eugene F. Brigham and Michael
C. Ehrhardt (Cengage Learning, 2017)
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(3)Financial Management for Small Business: Financial Statements, Cash Flow,
Budgeting, and Ratio Analysis by Diane Kennedy (Career Press, 2012)
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