Maintenance of Accounts and working Capital Management

You have learned in Unit 5 that, various branches of accounting cater to the information needs of various users such as shareholders, auditors, management,
employees etc. But, when we talk about ‘accounting information’, we generally
look at it in a broad sense, rather than in terms of its specific branches like financial accounting, management accounting, cost accounting etc. In this Unit, we shall deal with some illustrative uses of accounting information for the purpose of management of funds in the short-term, that is, for current operations of the business.
 

The term ‘funds’ here refer to working capital (WC), which can be regarded as that portion of the firm’s total capital, which is employed in short-term operation.In simple words, we can say that WC is the investment needed for carrying out day-to-day operations of the business smoothly. The management of WC is equally important as the management of long-term financial investments in a business.But before, we explain the significance of WC & approaches for its efficient management; let us take a brief look at the purpose of accounting information in general, and its role in WC management, in particular.