Financial Management and Control Assignment PGBM01
University of Sunderland, Business School Page 2
This report of Financial Management and control is base on fourparts. The first analyse the
Arrowbell Company’s performance in
relation to profitability; liquidity; asset utilisation and investorsratios.Second part describes the feasibility to invest in the new machinein the light of four different appraisal method taught during themodule and critical evaluation of these methods. Third part analyze cost volume relationship and criticize theassumptions of the breakeven analysis in the light of the reality of
today’s business environments.
Fourth Part describes The main sources of finance available tobusiness and the advantages and disadvantages of each source,Budgeting as a means of planning and control, relevance of committed fixed cost within short term decision making
Thecalculations are available in Appendices.
ASSIGNMENT ON FINANCIAL AND MANAGEMENTACCOUNTING
Truck $10,000 purchase price of the truck. Less depreciation $ 1,000 amount deducted asa depreciation expense Net Truck: $ 9,000 net book-value of the truck.The $9000 simply represents the book value of the truck after depreciation has beenaccounted for. This figure says nothing about other aspects that affect the value of an itemand is not considered a market price.
This concept is the basis of the fundamental accounting equation:
Assets = Liabilities + Equity
1.Assets are what the company owns.2.Liabilities are what the company owes to creditors against those assets3.Equity is the difference between the two and represents what the company owes toits investors/owners.All accounting transactions must keep this equation balanced so when there is an increaseon one side there must be an equal increase on the other side or an equal decrease on thesame side.
The objectivity concept states that accounting will be recorded on the basis of objectiveevidence (invoices, receipts, bank statement, etc…). This means that accounting recordswill initiate from a source document and that the information recorded is based on fact andnot personal opinion.
This concept defines a specific interval of time for which an entity’s reports are prepared. This can be a fiscal year (Mar 1 – Feb 28), natural year (Jan 1 – Dec 31), or anyother meaningful period such as a quarter or a month.
This requires understating rather than overstating revenue (income) and expenseamounts that have a degree of uncertainty. The rule is to recognize revenue when it is
RAHUL GUPTA, MBAHCS (1
SEM), SUBJECT CODE- MB0025, SET-1Page