Finance Assignment 

Finance Assignment 

Question 1

Accounting is an important factor in business because it helps summarize and record financial transactions and analyze them before reporting the results. Thus, from this view, it is clear that every type of accounting has its distinguished meaning to the company. For instance, financial accounting is the type of accounting that help businesses to summarize their financial data reports so that the management can use them in making decisions. It is represented to the company management in order to help them make financial decisions rationally. In most instances, financial accounting always gives a fair and true view of the company's financial position to various parties. Apart from that, management accounting is the current field of accounting that helps in managerial aspects (Surbhi, 2021). The primary mandate of management accounting is to give organization management qualitative and quantitative financial data to help them make rational economic decisions. It always helps managers get essential information that they can use to maximize organization profit by making effective decisions for the company. It is also essential within the company because it helps managers analyze performance before formulating the needed strategy that can help them succeed in the market. In addition, financial management, on the other side, plays a significant role within the company as it always manages to handle finances in a way that allows it to be successful and compliant with regulations. This indicates that financial management provides the organization with a pathway to attain its objectives and goals. In contrast with the two, financial management helps provide financial guidelines that assist the company in planning based on their available resources (Suzy Strutner, (n.d). With the current competitive market, financial management plays a vital role in helping businesses achieve their business goals. For instance, financial management helps businesses have financial planning and know-how to manage their funds. Therefore, from the analysis of the three, it is clear that the organization needs to embrace them to achieve its goals and objective in the market.

Question 2

Costing is an important factor in accounting because it always helps businesses to be accountable in the long run. Account people have been using traditional and activity-based costs in accounting to develop effective financial information. Activity-based costing helps each product manufacturer identify all specific overhead operations. This demonstrates that not all kinds of companies require all overhead costs to be supported; hence, an active based system makes management understand that it is unreasonable to apply overhead costs to all products (Woodruff, 2019). When comparing the two, it is evident that activity-based costing is more accurate than traditional costing, but it's also more complex and expensive to execute. A traditional costing system is a method used when the company's overhead is low compared to the direct costs of production. From this view, it is essential for companies that manufacture their products to use activity-based costing rather than those that offer services because it is expensive to implement. Therefore, the main contrast between traditional and activity-based costing is the factors that are taken into consideration when assigning prices for overhead products. Most of the time, traditional costing uses a predetermined method to calculate overhead product rate, thus being viewed as inaccurate compared to activity-based costing (Woodruff, 2019). Of the two costings, the activity-based system is essential for the manufacturing companies with high-cost overhead costs because the system gives accurate value cost organizations can use in each product compared to the traditional costing. 

References

Suzy Strutner, S. (n.d.). How to successfully handle your company's finances. Retrieved April 11, 2022, from https://www.netsuite.com/portal/resource/articles/financial-management/financial

Woodruff, J. (2019, January 31). Traditional costing vs. activity-based costing. Retrieved April 11, 2022, from https://smallbusiness.chron.com/traditional-costing-vs-activitybased-costing-33724.html

Surbhi, S. (2021, November 02). Difference between financial accounting and Management Accounting (with functions, similarities, and comparison chart). Retrieved April 11, 2022, from https://keydifferences.com/difference-between-financial-accounting