Finance

What is Financial Accounting?

By: TT 29/09/2022

A business's financial transactions are summarized, analyzed, and reported in the area of accounting known as financial accounting.

..Prepares public financial statements. Stockholders, suppliers, banks, workers, government agencies, business owners and other stakeholders desire decision-making information.

Financial Accounting ..

Local and international norms control financial accounting. Generally accepted accounting principles (GAAP) is the standard framework for financial accounting in every nation.

Financial Accounting

Local and international norms control financial accounting. Generally accepted accounting principles (GAAP) is the standard framework for financial accounting in every nation.

Financial Accounting

The fundamental goal of accounting is to properly document the financial aspects of a company's operations (i.e. book-keeping).

Objectives of financial accounting

Systematic recording of transactions

Profit and loss account shows business activity for a given period. If expenditures outweigh sales, the firm is in loss. P&L helps management make good decisions.

Verify recorded transactions' results

Businessman wants to know what he owes (obligation) to outsiders and what he possesses (assets) on a given date. For this, an accountant creates a financial position statement.

Business financial status determination

Accounting attempts to satisfy the decision-makers' demands for financial information and supports them in making thoughtful decisions.

Information for logical decision-making

By balance sheet, management not only discloses what the company owns and owes, but also its ability to satisfy short- and long-term responsibilities..

Must be aware of the solvency situation