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Chapter 2 : ACCOUNTING BASICS - Coggle Diagram
Chapter 2 : ACCOUNTING BASICS
FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT DEFINITION
They are of function in an organization which concerned with profit,expense cash and credit.
Financial management refers to the strategic planning, organising, directing, and controlling of financial undertakings in an organisation or an institute.
CHARACTERISTIC OF FINANCIAL MANAGEMENT
Manages financial resources
Management of all financial resources is primary role of financial management.
Lower the risk in business
Financial management aims at lowering risk by maintaining a proper balance between profitability and risk.
Facilities cost control
Financial management implies various financial control techniques to keep the organization cost within the limits.
IMPORTANTCE OF FINANCIAL MANAGEMENT
Financial management is one of the most important aspects in business. In order to start up or even run a successful business, you will need excellent knowledge in financial management.
Maintaining enough supply of funds for the organisation
Optimum and efficient utilization of funds
FINANCIAL TERMS
ASSET
A financial asset is a liquid asset that gets its value from a contractual right or ownership claim.
LIABILITIES
a liability is defined as the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events.
OWNER EQUITY
Owner's equity represents the owner's investment in the business minus the owner's draws or withdrawals from the business plus the net income (or minus the net loss) since the business began.
EXPENSES
Expenses are outflows or other uses of assets or incurrences of liabilities (or a combination of both) resulting from the delivery or production of goods, rendering of services, or carrying out of other activities that constitute an organization's ongoing major or central operations.
REVENUES
Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) resulting from the delivery or production of goods, rendering of services, or other activities that constitute the organization's ongoing major or central operations.
ACCOUNTING DEFINITION
A systematic recording, reporting, and anyalysis of financial transactions of business
Accountant are the individu that required to follow a set of rules and regulations,such as the generally accepted accounting principles.
Accounting allows a company to analyze the financial to analyze the financial performance of the business.
STATEMENT
INCOME STATEMENT
An income statement is one of the three (along with balance sheet and statement of cash flows) major financial statements that reports a company's financial performance over a specific accounting period.
BALANCE SHEET
a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.
CASH FLOW STATEMENTS
The cash flow statement (CFS) measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses.