The Importance of Year End Accounts and Management Accounts
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Year End Accounts
Final accounts preparation and filing with the companies house is not an easy task. Many small business owners view this as a tedious and a time consuming task. This is mainly berceuse the business owners are more occupied on the business related matters rather than, accounting, bookkeeping and final accounts preparation.
However, when it comes to the year end every business must file final accounts that will show the real figures of the business. It will show as to how the business has performed over the concerned period of time. The final accounts needs to be prepared carefully paying attention to the accounting standards that govern the subject of accounting. For this purpose they need the help of a professionally qualified accountant.
The factors that will determine the accountant's preparation of final accounts for a business depends on factors like the scale of the business operation. the trading record of the business, company’s tax obligationsetc. Please make sure to select a professional accountant to help you with the VAT Returns, preparation of final accounts, filing with the HMRC and Companies House.
Management accounts act as the giuding light of any business. They can be prepared according to the time scale that is wished by the management of the business. Therefore, it can be stated that management accounts is more flexible than financial accounts as it doesn't have to comply to a time schedule.
What you can find in a management accounts package
• Periodical profit or loss and variances reports
• Cash flow statements
• Trend analysis
• Performance indicators
How can management accounts help businesses?
For a business to make decisions, one should have accurately calculated cost, revenue and forecasts to make the best business decision. The decisions based on the management accounts reports have a major impact on the business. In this scebario it is vital that the management is presented with some helpful forecasts to make the best possible decision. The set of management accounts is the perfect toolkit for every business to make the right decision
The importance of management accounts for a business
01. Improves business profit
It is the job of management accountants to improve business profitability. This is done by analysing the operational processes. This will involve analysing sales, variable costs and variance analysis.
02. Management accounts help solid decision making
Somwtime back the business decisions were mainly made based on intuition and judgement capability of senior executives. The set of financial accounts too help the decision making process in this scenario. However, when it comes to management accounts, it helps decision makers by giving an objective overview of the concerned variables for the respective decision.
03. Better financial reporting
A well prepared management accounting system will improve reporting standards based on final accounts. Another advantage is that, the variances can be corrected before the final financial statements are prepared and released to external stakeholders.