1 Financial Managment Flashcards
Security is…
Entities ability to pay debts
Analysed by relating different elements of information in statements
Profitability is…
The entities capacity to earn income in excess of expense over a given period.
Analysed by relating the information in the income statement to other elements of finance
Ethical behaviour is
Behaviour that is fair, objective and consistent.
Considers everyone’s interest.
Doing what’s right and not just legally required.
What is gearing?
The relationship between equity and borrowings. High borrowings = highly geared.
Management accounting is …
The process of producing reports and providing financial information useful for decision making.
Financial accounting is…
The process of producing general purpose financial reports used by external parties.
3 purposes of control
Safeguard assets from loss or damage
Assets must be used efficiently as possible.
Provide management with necessary info to ensure protection and efficient utilisation
