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Here we discuss about the Importance of Accounting Cycle. If you want to know better understand this topic, then kindly read my article about “ Steps in the Accounting Cycle ". Through this Cycle, true and fair view of financial statements can be presented to the Users of Financial Statements (Investors, Banks, customers, Financial Institutions, Creditors, Suppliers and so on).                                                                                                   4 main Importance ü   Company Businesses can easily check their performance through Income Statement or Statement of Comprehensive Income, Balance Sheet, Statement of Cash Flows and Statement of Changes in Equity. Ultimately, the weaknesse...

If you don’t know about Statement of Cash Flows then kindly read “ S tep in the Accounting Cycle ” , so that you can better know about this Statement. After preparing Balance Sheet or Statement of Comprehensive Financial Position, the number of this Statement comes. This financial Statement helps the company to pay debts and proposed dividend to shareholders. The company businesses need financing, especially external financing to generate resources in future. For the Preparation of this statement, you need to know the basic of Accounting . The efficient presentation of this statement can influe nce the Users of Financial Statements , especially investors who want to invest the money in company businesses. Below we discuss two methods used for the preparation of this statement. In order to solve Cash Flow Problems or in order words to better know about how to prepare statement of Cash Flows, there are two methods of its preparation: ü Direct Method This...

Here we discuss about Working Capital Management Nature, Purpose and Significance. So let us start: Purpose of Working Capital Management The main objective of WCM is to maintain a balance between liquidity and profitability of the business. Business must have sufficient amount of funds in liquid form but not too much to reduce the level of profitability. In W.C.M, not only those sources, which are utilized for short period of time, normally one year, are studied but also those sources that are used for more than one year. Short-term sources of finance are for variable working capital while long-term sources of finance are for fixed working capital. Nature of Working Capital Management In WCM, the company makes a plan for its resources to meet obligations. This plan should be implemented by taking into account the prevailing nature of the current resources and current obligations. Current resources are assets which have life of one year. Current obligations ...

Here we discuss about Short Term Sources of Working Capital Financing. S.T.F (Short-term finance) is raised by the company in covering day to day expenses and meeting short-term obligations. Short-term financing and Working Capital are related to each other. Short-term financing includes all those financial instruments and techniques adopted by the company to raise the cash needs to meet current obligations. The company may get cash by investing in capital markets, investing in marketable securities and getting business loans from banks. Sources of Short-term Financing   Short-term Financing can be raised by the company through: Ø Spontaneously Financing Ø Negotiating Financing Ø Spontaneously Financing Spontaneously financing is utilized by default in conducting the daily business’s obligations and operating expenses. Forms of Spontaneously Financing Ø Account Payable Ø Outstanding Expenses Ø Account...