The role of the finance department Handout 3

Question 1

why is the finance department important to businesses?

Answer 1

the business has to know how viable it is and balance revenue with costs to make a profit

Question 2

give 5 roles of the finance department and explain each one

Answer 2

bookkeeping procedures - keeping records of the purchases and sales made by the business

creating published accounts -
financial statements need to be produced at given time intervals
records of purchases and sales are totalled up to create an income statement
a balance sheet shows the assets and liabilities of the business at the year-end

providing management information -
managers require financial information to enable them to make better decisions

management of wages -
the payroll section of the finance department will be responsible for calculating the wages and salaries of employees and organising the collection of income tax and national insurance for the Inland revenue

raising capital -
also responsible for the technical details of how a business raises finance
supervise the payment of dividends to shareholders