Chapter 1 Matrix: Comparison of Financial Management with Accounting, Economics,
Management, and Finance.
Particulars Financial Accounting Economics Management F
Management
Definition/ It is a decision A systematic recording A branch of the A set of activities It is a st
Nature making process of transactions relating social sciences that (including manage
concerned with to the firm’s activities is concerned with planning and money, m
planning, acquiring in the books of the production, decision making, in large
and utilizing funds accounts and consumption, and organizing, governm
in a manner that summarizing the same transfer of leading, and
achieves the firm’s for presentation in the resources. controlling)
desired goals. financial statements. directed at an
organization's
resources with
the aim of
achieving
organizational
goals in an
efficient and
effective manner.
Scope Mainly concerned Process of identifying, Macroeconomics The purpose of Finance
with acquisition, classifying, recording, and having good primarily
financing and summarizing and microeconomics. management in a activities
management of analyzing of firm is to funds and
assets. transactions to prepare coordinate the in a com
financial statements business assets. A
that is useful for activities to the financial
making economic desired goa's and balance
decision. objectives of the outflow o
company. function
includes
investme
financing
dividend
Purpose in the Through decision It is to provide financial Understanding To coordinate To he
organization making it helps to statements to the users economics can give and organize an businesse
maximize the of the company investors the tools organization's governm
current value per through presentation to predict many operations manage,
share of the existing of financial information macroeconomic so that those efficiently
stock or ownership of the entity to make a conditions and actions may to the be
in a business firm. In decision. understand the contribute to the maximize
other words, to implications of company maximize
make money and those predictions on achieving its
add value for companies, stocks, goals. Using a
owners. and financial company's
markets. resources most
effectively and
productively is
one of the most
important
aspects of good
business
management.
Users of The Finance Internal and External Finance Managers The top level of External
Information Managers of the Users the management Stakehold
Firm such as Board of bodies an
Directors.
Goal It is to maximize the It is to accurately are necessary to be Proper It cover
wealth of the record and report an pursued to achieve management to fund ari
shareholders, organization’s financial the profit objective, meet the meet th
making profit while performance that is which include, objectives of the establish
not engaging in essential to decision creation of organization. business
unethical practice. makers. customers, operate.
regular innovations
and best possible
use of available
resources.
Importance/ It helps a business To maintain a It enables people to It helps in Finance p
Significant to organize its systematic, accurate understand people, Achieving Group in the
finances and acquire and complete record of businesses, markets Goals - It businesse
the necessary all financial and governments, arranges the companie
capital. It is crucial transactions of a and therefore better factors of necessary
for efficient and business. These records respond to the production, operate a
effective use of are the backbone of threats and assembles and operation
borrowed money. the accounting system. opportunities that organizes the adequate
Businesses need Business owners should emerge when things resources, businesse
financial be able to retrieve and change. integrates the for esse
management to review the transactions resources in such a
make financial whenever required. effective manner supplies
decisions. to achieve goals. needed t
It directs group operation
efforts towards
achievement of
pre-determined
goals.
