Management Account Service

Both are important to any business but differ to some degree. Management accounts are prepared all year round to provide information about the financial position of a business using the balance sheet, cash flow, income statement, among others. Not only do they show the financial position of the organisation, but they also help business owners make important operational decisions. On the other hand, annual accounts consist of formal statements about the activity of a company over a period of operation. Annual accounts are a legal requirement while management accounts are not legally required. State legislations and regulators require the preparation of annual accounts.

Management periods refer to the period in which managerial accounting statements are required to be produced. Due to the fact that management accounts are not a legal requirement, there is no time limit. Nevertheless, it is advisable for business owners to generate the reports within a weekly or monthly period. As well as playing an important role in the effective running of business operations, engaging potential investors and dealing with tax obligations, a business will save itself from excess costs when management accounts are readily available. As you never know when this information will be needed, it is best to adhere to a weekly or monthly period consistently.

At the end of every business year, accounts are settled and closed before another accounting period starts. The amount of money a business has at the start of each accounting period is called the opening balance. The business year does not automatically mean the end of the calendar year. It may be a new accounting period for your own business or when a new accounting method is adopted by the business. The opening balances of a business are always clearly stated in the trial balance and it must be equal on the debit side and the credit side of the entries.

Closing stock refers to the raw materials, work-in-progress and finished goods inventory which a business firm has as at the end of a financial reporting period. Closing stock is also described as ending inventory. When there is a proper count, closing stock can be used to ascertain the cost of goods sold during a business year and to show the number of unsold stock as well as the monetary value. Small business firms can physically count their closing stock but for large business firms, it may be challenging to adopt such a method. Management software can be used to ascertain the amount of closing stock.