Important Points for IC 89 - Management Accounting Exam
Page 3 Of 54
Go to:
Allocation of fund decisions is another important area of financial management. The financial manager is required to identify situations which require more funds or where funds remian idle or where proper use of funds is not made. The financial manager is responsible for effective use of funds in such a manner that all funds generate income more than cost of capital at which funds are procured.
Financial accounting is mainly concerned with keeping records, books and registers for financial transactions and preparation of financial statements while financial management is concerned with financial statements analysis, risk and return analysis, business proposal and capital budgeting.
Financial accounting is based on accrual analysis while financial management is based on Cash Flow or Fund Flow principle. The former deals with certainties and actual performances while latter deals with uncertainties and probabilities.
Financial management function comprise of: Acquisition of funds, Raising of capital, Allocation of funds and capital among different projects and plans with a view to maximise the value of the enterprise.
To carry out the role and responsibility as financial manager, one must have: Through knowledge of financial accounting, Sound understanding of macro and international economics, Expertise and exposure in money market and capital market operations.
MODELEXAM® 
www.realsoftinfoplan.com