Question

How do accountants and financial managers differ in their use of financial information? Why is cash flow more significant to a financial manager than it is to an accountant?

Answer 1

Answer:-

Accountants:-

The accountants keep track of day-to-day business transactions. They are in charge of preparing financial statements like balance sheet, income statement and cash flow statements.The accountants work as a team and they need to analyze the data through the financial statements and help the management with suggestions.

The accountants should ensure that the accounting standards meet the regulations, keep all the documents of financial statements properly and try to identify the errors which can be made while preparing the financial statements. The accountants use financial information to access the costs that are incurred and how these costs will effect the company. The accountants provides all the data to the senior management and finance managers and ensure all the financial information is updated from time to time.

Financial Managers:-

The primary goal of the financial managers is to analyze the data of the financial statements and project the long term goals for the company. The financial mangers project the growth of the company based on the growth rates and prepare the strategies that will help the senior management in taking decisions to lead the company towards profitability.

The responsibility of the finance managers also includes cost cutting in some areas of business to help the company improve it's financial health. The finance managers can also look for inorganic growth that helps company to acquire companies that strategically fit the business of the company.

Cash Flow significance to financial manager than accountant

Cash flow is more significant to the finance managers than the accountants because the finance manager is responsible to maintain the health of the company and meet the day-to-day operating expenses incurred by the company. The finance manager should also look how efficiently the cash is used and keep track of the liquidity ratios and ensure that there is enough liquidity for meeting all the short term obligations of the company.

The accountants role is to see that all that there is enough cash to pay salaries to the employees and also see that all the office expenses are met without fail.