Advantages of working capital Working capital is the life blood and nerve centre of a business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of working capital. The main advantages of adequate working capital are as follows:- 1. Solvency of the business : Adequate working capital helps in maintaining solvency of the business by providing uninterrupted flow of production. 2. Goodwill : Sufficient working capital enables a business concern to make prompt payment and hence help in creating and maintaining Goodwill. 3. Easy loans : A concerns having adequate working capital, high solvency and good credit standing can arrange loans from banks and others on easy and favorable terms. 4. Cash discount : Adequate working capital also enable a concern to avail cash discounts on the purchase and hence it reduces costs. 5. ...

Factors determining the working capital requirements The working capital requirements of a concern depend upon a large number of factors such as nature and size of business, the character of their operations, the length of production cycles, the rate of stock turnovers and the state of economic situation. It is not possible to rank them because all such factors are of different importance and the influence of individual factors changes for a firm over time. However the following are the important factors generally influence the working capital requirements: 1. Nature or character of business : The working capital requirements of a firm basically depend upon the nature of it's business. Public utility undertakings like Electricity, water supply and railways need very limited working capital because they offer cash sales only and supply services, not products, and as such no funds are tied up in inventories and receivables. On the other hand trading and financial firm's require l...

Objectives of Management Accounting The primary objective of management accounting is to enable management to maximize profit or minimize losses. This is done through the presentation of statements in such a way that management is able to take correct policy decision. Followings are the important Objectives of management accounting : (1) Planning and policy formulation : The object of Management accounting is to supply necessary data to the management for formulating plans. Planning is essentially related to taking decision for future. It also includes forecasting, setting goals and deciding alternative course of action. Management Accountant prepared statements of past results and gives his preference for a particular alternative. The figures supplied and opinion given by the management accountant help management in planning and policy formulation. (2) Helpful in controlling performance : Management accounting devices like standard costing and budgetary control are helpful in controll...

Scope of management accounting Management accounting is anew approach to Accounting. It provides techniques for the interpretation of Accounting data. It also helps in Developing realistic approach  to future course of action. The main Aim is to helps management in it's functions of planning, directing and Controlling. Management accounting is related to a number of fields. At the seven International Conference of accountant held in Amsterdam in 1957, the main emphasis was on cost accounting, Budgetary control, material control, interim Reporting, Determination of the most efficient and economical accounting system, Special cost and Economic studies and  assessing management in interpreting financial data. The following facts of management accounting are if a great significance and firm the scope of this subject. (1) Financial Accounting : Financial Accounting deals with the historical data. The record facts about an organization is useful for planning the future course of act...

Distinction between partnership and company These are the following differences between  partnership and company:- (1) Regulating Act : A Company is regulated by companies Act, 2013, while a partnership firm is governed by the Indian Partnership Act, 1932. (2) Registration : A company can not come into existence unless it is registered, whereas for a partnership firm registration is not compulsory.  (3) Number : The minimum number in a public company is seven and in case of a private company two. In case of partnership is two. The maximum number of members in case of a private company is two hundred but in case of a public company there is no such maximum number of Member. In partnership the number should not exceed twenty, while in case of banking business, it should not exceed ten.  (4) Liability : In case of joint stock company the liability of shareholders is limited (except in case of unlimited companies) to the extent of face value of shares or to the extent of guar...

Management Accountings management accounting is comprised of two  word management and Accounting .it is the study of managerial aspect of Accounting. the emphasis of management Accounting is to redesign Accounting in such a way that it is helpful to the management in formation of policy , control  of execution and appreciation of effectiveness. it is that system of accounting which helps management  in carrying out it's functions more efficiently.    Definitions Anglo-American Council on Productivity - "maccounting is the presentation of  Accounting information in such a ways as to assist management in the creation of policy and the day-to-day operations of an undertaking."  Characteristics of nature of management Accounting These are the following important features of management Accounting :- (1) Providing accounting information : Management accounting is based on accounting information. The collection and Classification of data is the primary functi...