KNEC Questions with answers
Answer the question below from past papers KNEC business finance, diploma in business management:
Explain the relationship between business finance and accounting discipline
Accounting and business finance have a significant relationship. While accounting is concerned with the process of recording and reporting financial information from daily business transactions, the discipline of business finance involves the use of the same accounting information to make business decisions such as expenditure and investment.
Business finance uses accounting information to determine the effectiveness and efficiency of business operations and helps managers to make appropriate improvements to make business processes more efficient and profitable. For example, finance managers can use financial reports such as statement of cash flows to develop a working capital analysis. Accounting information can also be used to create budgets.
Generally, accounting deals with day-to-day records and reporting of financial information while finance uses the very same information to make projections regarding future growth and to analyze expenditure so as to make appropriate strategic decisions.
