[...]... other aspects of finance Finance uses accounting information to make decisions regarding the receipt and use of funds to meet corporate objectives Accounting is generally broken down into two categories: financial accounting and managerial accounting Financial accounting records the financial history of the business and involves the preparation of reports for use by external parties such as investors and. .. your inventory of stock, for example, the less inventory (merchandise held for resale) you keep, the higher the expected return (since less cash is tied up), but also the greater the risk of running out of stock and thus losing sales and customer goodwill 6 Accounting and Finance for the Nonfinancial Executive No matter who you are, you are involved with finance in one way or another Financial knowledge... • • • No formal charter is required Organizational costs are minimal Profits and control are not shared with others The income of the business is taxed as personal income Confidentiality is maintained 12 Accounting and Finance for the Nonfinancial Executive The disadvantages are: • • • • The ability to raise large sums of capital is limited Unlimited liability exists for the owner The life of the business... this section, you will learn the language of finance as well as the what and why You will see the responsibilities of financial managers, and the relationship between accounting and finance will be explained 1.3 THE IMPORTANCE OF FINANCE Finance provides discipline to all the components of the organization involved in decision making Therefore, you need knowledge of it to perform effectively A knowledge... presents the functions of the financial manager 1.3.3 WHAT IS THE RELATIONSHIP BETWEEN ACCOUNTING AND FINANCE? Accounting is a necessary input and subfunction to finance The primary distinctions between accounting and finance relate to the treatment of funds and decision making If you are employed by a large firm, the financial responsibilities are probably carried out by the treasurer, controller, and financial... the budget is prepared You must identify any problems with the proposed budget so they are rectified before the budget is finalized Even after the budget is implemented, you may suggest changes in subsequent budgetary formulations Also, you 3 4 Accounting and Finance for the Nonfinancial Executive must intelligently discuss the budget with other organizational members If you do not adequately understand... the scope and role of finance, the language of finance, the responsibilities of financial managers, the relationship between accounting and finance, and the financial and operating environment in which finance is situated 1.1 THE NONFINANCIAL MANAGER’S CONCERN WITH FINANCE You should have knowledge of finance and know how to apply it successfully in your particular departmental functions This is true whether... financial and cost accounting, taxes, control, and audit functions The controller is primarily involved in collecting and presenting financial information He or she typically looks at what has happened instead of what should or will happen The controller prepares the annual report and Securities and Exchange Commission (SEC) filings as well as tax returns The SEC filings include Form 10-K, Form 10-Q, and Form... any other department You should know what to look for, the right questions to ask, and where to get the answers Financial knowledge aids in planning, problem solving, and decision making Finance provides a road map in numbers and analysis so that you can optimally perform your duties Further, you must have financial and accounting knowledge in order to understand the financial reports prepared by other... stated, they are distributed equally Each partner acts as an agent for the others The partnership (and thus each individual partner) is legally responsible for the acts of any partner However, the partnership is not bound by acts committed beyond the scope of the partnership Forming a partnership creates these advantages: • Partnerships can be easily established, with minimal organizational effort • . Administration California State University at Long Beach, California ACCOUNTING and FINANCE for the NONFINANCIAL EXECUTIVE An Integrated Resource Management Guide for the.   An Integrated Resource Management Guide for the 21st Century ACCOUNTING and FINANCE for the NONFINANCIAL EXECUTIVE St. Lucie Press Boca Raton London