Managing Financial Resources Assignment Example | Topics and Well Written Essays - 1500 words

Managing Financial Resources - Assignment Example Usually, the concept of opportunity cost is not recorded in the books of accounts. Then also it is a significant factor in the decision-making process also. Decision making is the fundamental nature of the management of an entity. It is necessary to collect, analyze and present the accounting information in an appropriate manner to meet the requirements of various interested groups. Stakeholders of the company mean those groups of persons who are interested in the organizational functions and affairs. The stakeholders of the company mean the shareholders, lenders, employees, suppliers, customers, competitors, Government as well as the public as a whole. Moreover, the balance sheet of a company is giving focus on the changes that have taken place in the accounting year. The ultimate object of financial statements is that of evaluating the financial strength and weaknesses of the firm.Capital budgeting means planning for capital assets. The decision about capital budgeting means a deci sion as to whether or not the money should be invested in long term projects. The term budget is a device which helps the management in planning and control of business activities. It is a statement relating to future plans. Budget is essential for business because it provides management with a plan of operation to be followed during a specified future period. Not only this but also it is possible to plan and control the income and expenses. A business might have a cash budget, sales budget, purchase budget, etc.The concept of variance analysis is an important concept in standard costing. Variance means the difference between actual cost and standard cost. Variance point out to the management that whether the costs are under their control or beyond? It may be either favorable or not. If the actual cost is less than the standard, the difference indicates that there is a positive variance, but reverse on the other hand. Variance analysis is the procedure of evaluating variances by sub dividing the total variances in such a way that the management can assign responsibility for poor performance. Generally, the variances may be of cost variance and sales variance. Among them, the cost variance is significant and which may be of three types, material variance, labor variance, and overhead variance.