9) UNIT 2 - The Finance Department

Question 1

List the roles of the finance department

Answer 1

• adequate funding
• control costs
• monitor cash-flow
• monitor performance
• make decisions
• plan for the future
• reporting on performance
• meeting legal obligations

Question 2

describe:

adequate funding

Answer 2

• This allows the organisation to be able to acquire resources needed to achieve objectives and therefore strategic aims
• e.g. Asda, need finances to buy their stock or open new stores

Question 3

describe:

control costs

Answer 3

• This means the business will have better profitability as it will reduce waste and will only invest in essential resources
• e.g. using tender contracts for suppliers to get the best deal for their resources

Question 4

describe:

monitor cash-flow

Answer 4

• finance dept will closely monitor each cash flow and take corrective action if problems occur
• means the business will have good liquidity
• e.g. fiance dept will prepare and monitor budgets

Question 5

describe:

monitor performance

Answer 5

• finance dept will use the final accounts to analyse how the organisation has performed and identify ares of weakness.
• This means organisation can take action in those ares, therefore increasing profits

Question 6

describe:

make descisions

Answer 6

• finance dept, makes use of financial information to plan budgets and make decisions
• This means the organisation will be able to meet strategic aims efficiently

Question 7

describe:

plan for the future

Answer 7

• finance dept can spot trends in performance by analysing past and future trends
• allows the organisation to organise a strategic approach to increase profitability in the future

Question 8

describe:

reporting on performance

Answer 8

• the finance director will report on performance of the organisation to the owners and shareholders
• this means the owners will understand the financial situation of the business and can take action to ensure the success of the business

Question 9

describe:

meeting legal obligation

Answer 9

• the finance dept, is responsible for preparing the final accounts which is a legal obligation
• means that the business will be paying the correct amount of taxation to the inland revenue department of the government