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Financial Accounting Help

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Financial accounting is defined as a process of recording, summarizing and reporting of countless number of transactions conducted in a business organization. The main objective of financial accounting involves preparation of financial statements. These financial statements are commonly used in accounting for example balance sheet, income statement and cash flow statement.

The primary objective of financial accounting is the preparation of financial statements – including the balance sheet, income statement and cash flow statement – that encapsulates the company’s operating performance over a particular period, and financial position at a specific point in time. These statements – which are generally prepared quarterly and annually, and in accordance with Generally Accepted Accounting Principles (GAAP) – are aimed at external parties including investors, creditors, regulators and tax authorities.
The key difference between financial and managerial accounting is that financial accounting is aimed at providing information to parties outside the organization, whereas managerial accounting information is aimed at helping managers within the organization make decisions.

In order to acquire proficiency in financial accounting, one has to carry out rigorous study and also gain practical experience. Only after this it is possible to get accreditation from a recognized government body. In the United States, the designation is termed as Certified Public Accountant (CPA). In other countries this may be known by other names such as, Chartered Accountant (CA), Certified General Accountant (CGA) and Certified Management Accountant (CMA). In some developing countries Chartered Accountant (CA) is the primary financial accounting designation.
Financial accounting is a specific branch of accounting. It helps in keeping track of the financial transactions of a company. By following standard guidelines, different transactions are put forth in the form of a financial statement e.g. income statement or balance sheet. These financial statements are issue by the companies on a regular basis. The financial statements are in public domain and its main recipients are stockholders or borrowers. For a widely stock of a company, its financial statements are extensively and freely available. There are chances of the information reaching other people as well, such competitors, customers, employees, labor organization and investment analysts.

The primary objective of financial accounting is not to report the value of a company. It only provides sufficient information to others so that they can evaluate the value of the company for their own use. The information is presented by common rules, popularly known as accounting standards and as generally accepted accounting principles (GAAP). In the U.S., these standards are developed by the Financial Accounting Standards Board (FASB). In addition to that companies also have to comply with the mandatory requirements of the Securities and Exchange Commission (SEC).

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