The Role of Financial and Accounting Management Essay

The Role of Financial and Accounting Management - Essay ExampleThe income statements are lively to measure the net income of the organization during a specific outcome. It compares the revenues and expenses related to the specified period for the purpose of measuring the performance of the firm in terms of profitability, cost incurred and revenues generated. Using this statement, the managers are enabled to compare the previous periods results with that of the current period and measure the performance of the firm on the basis of the differences that occurred. For instance, an increase in expenses may serve up the managers analyze the situations that resulted in excess expenditure. The possible reasons may include increased losses due to poor working conditions, poor employee performance, change of material, increase in production and sales or so on. Hence, the statement of comprehensive income helps in measuring the performance of the business with its own past performance and pr ovides help to the managers with the denomination of risk elements that are affecting the performance of the firm. Ratio analysis is another important measure that helps in the measurement of the performance within the organization by comparing the current periods results with the past results. The statement of changes in fairness also helps in the measurement of the changes that occurred in the owners equity and the trends that are seen in the contributed capital and retained earnings of the firm. An increase or decrease in the equity shows the performance of the firm over a period of time.