Accounting technicians scheme west africa
SECTION D FINANCE AND ACCOUNTING FUNCTION
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| SECTION D FINANCE AND ACCOUNTING FUNCTION Section contents (a) Learning objectives b) Definition of Finance c) Nature of the Finance Function d) Financial markets/System e) Nature of Financial system f) The Money market g) Functions of the Money Market h) Common Money Market Instruments i) Role of participants in the money market. j) The Capital Market k) Segments of the Capital Market l) Functions of Capital Market m) The Accounting function n) Primary Functions of an Accounting Function o) Strategic Functions of an Accountant p) Structure of Accounting Department q) Positions of an Accountant within the Organisation r) Review questions Learning Objectives After studying this section, the reader should be able to ▪ Explain the meaning of finance. ▪ Explain the meaning of financial markets. ▪ Explain money market. ▪ Explain capital market. ▪ Explain the role of participants in the money market. ▪ Explain the capital market. ▪ State and explain the functions of money and capital markets. ▪ Explain the purpose and importance of accounting function. ▪ Explain the structure of an accounting department in atypical organisation. D.1 Definition of Finance Finance maybe defined as the art and science of managing money. Finance also is referred as the provision of money at the time when it is needed. Finance is concerned with the process, institutions, markets, and instruments involved in the transfer of money among individuals, businesses, and governments. 264 D.2 Nature of the Finance Function The finance function is the process of acquiring and effective utilizing funds of a business. Finance functions are related to overall management of an organization. Finance function is concerned with the policy decisions such as like of business, size of firm, type of equipment used, use of debt, liquidity position. These policy decisions determine the size of the profitability and riskiness of the business of the firm. The following outline summarise the nature of the finance function i) Inmost of the organizations, financial operations are centralized. . ii) Finance functions are performed in all business firms, irrespective of their sizes / legal forms of organization. iii) They contribute to the survival and growth of the firm. iv) Finance function is primarily involved with the data analysis for use indecision making. v) Finance functions are concerned with the basic business activities of a firm, in addition to external environmental factors which affect basic business activities, namely, production and marketing. vi) Finance functions comprise control functions also vii) The central focus of finance function is valuation of the firm. Finance is different from Accounting and Economics however, it uses information of accounting for making effective decisions. Accounting deals with recording, reporting and evaluating the business transactions, whereas Finance is termed as managerial or decision making process. Economics deals with evaluating the allocation of resources in economy and also related to costs and profits demand and supply and production and consumption. Economics also consider those transactions which involve goods and services either in return of cash or not. Download 3.37 Mb. Share with your friends:
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