It depends on many factors; viz. Here profit maximisation criterion fails to express it. How a private firm should behave depends on profit maximisation as a decision criterion.
The traditional approach was criticised for its conceptual and analytical grounds by the proponents of modern or contemporary approach since the former neglects the problems of allocation of capital to different assets and the problems of optimum combination of finance, which, in other words, omitted the following two important matters, as pointed out by Dewing: Conversely, actions with values less than cost reduce the value of the firm and should be rejected.
There are a number of classifications which can be used to define the specified goals of financial management. The chartered accountants produced by ICAP are according to the changing trends and latest global requirements.
An experienced Professional accountant should understand his importance to the business and be able to recognize the limitations he has to work with. The money received to-day has a higher value than money received next-year, a profit seeking organisation must consider the timing of cash flows and profits.
From the table 1. Similarly, alternative A is better from the standpoint of uncertainty and risk.
One of the objectives of these publications is educating the role of professional accountants in modern era. After reading this essay you will learn about Financial Management: Generally, finance strives for a high level of long-term profit and, at the same time, a short-term profit.
Some deal with financial reports such as balance sheets and income statements whereas others are more concerned with tax planning and compliance. Survival and development of a firm depend on it. No doubt the latter project may result in a greater total profit if the firm could not immediately re-invest its profits when the same was received from the 3-year project.
He is able to understand all the limitations as well as the strengths of the company and can therefore advice the management to make profitable decisions. Exceptional professional accountants have a network of accounting contemporaries, who help them solve the situations outside their areas of expertise.
This approach, however, recognises the following: The investment and the financial policies depend the above decisions. Funds which are flowing in and out should always be monitored in order to assure that they are safeguarded and properly utilized.
They inspect the records thoroughly to make sure that no one is stealing or wasting the hard earned business money. That is, there must be efficient use of resources. The functions and duties of the treasurer and controller are noted below: Let there be two investment opportunities, A and B, whose profit depend on the state of economy as illustrated in Table 1.
The benefits of an investment or financing decision can be measured in terms of the stream of future expected case flows generated by the decisions, rather than the accounting profit which is the basis for the measurement of benefits in the case of profit maximisation criterion.
Besides, under perfect competition, where all prices accurately reflect true values and consumers are well informed, profit maximisation behaviour by firms leads to an efficient allocation of resources and maximum social welfare.
Therefore, it can be taken into consideration that the profit maximisation, as an operational criterion, is unsuitable and inappropriate of a firm from the standpoint of investment, financing and dividend policy.
It removes the limitations suffered by the earlier method — profit maximisation. From the discussion we have made so far, it becomes clear that a firm has to take the following three major decisions: Therefore, the value of a stream of cash flows can be calculated by discounting its elements back to the present at a capitalisation rate that reflects both time and risk.
In other words, the firm can pay all its bills as soon as they become due and have sufficient cash to take anticipated discounts for cash purchases along with a reserve in order to meet certain contingencies.
He has to make things work his way in order to make the right decisions every now and then. Business accountancy is one of the most sought out occupation in the modern day era.Accounting and Financial Statements - In this essay I am going to explain and identify external users of accounting information and give detail on the main characteristics and how these characteristics and the conceptual framework develop the benefits of financial statements for external users.
in this modern globalized era, owing to too. In short, according to the modern approach, financial management deals with the solution of the above three major problems relating to the financial operations, viz.
Addiction to Modern Technology Essay. A+. Pages:3 Words This is just a sample. To get a unique essay. We will write a custom essay sample on Addiction to Modern Technology specifically for you for only $ $/page. Financial Accountants in Modern Era ; Becoming a Business Accountant.
Financial Accountants in Modern Era Essay Professional accountant: A professional accountant is an educated and experienced accountant who is responsible to keep a check on the company’s money flow.
The Roles and Responsibilities of Management Accountants in The Roles and Responsibilities of Management Accountants in the Era of Globalization The Roles and Responsibilities of Management Accountants in the Era of Globalization Mohammad Ahid. as. The Role Of Accountants In Todays Business Organizations Accounting Essay.
On the other hand, the additional or modern roles of accountants are financial planning, business analysis and strategy, technology planning and consulting.
If you are the original writer of this essay and no longer wish to have the essay published on the UK.Download