concept of financial accounting, Financial Accounting

  Concept of  financial Accounting

Accounting is the art of recording, classifying and summarizing the business transactions and events. Double Entry System is the base for recording business transactions. According to this system, every business transaction has two aspects i.e., we receive something, we give something else in return. So for every debit there is always corresponding credit and vice versa.

To standardize the accounting information, every organization would have to establish certain accounting policies based on GAAP. Accounting policies encompass the principles, bases, conventions, rules and procedures adopted by managements in preparing and presenting financial statements.

While the conventions are based on what is practicable, there are certain accounting concepts, which are based on logical considerations. Accounting concepts are ideas and assumptions that are fundamental to accounting practice. Some of the important concepts are – money measurement concept, business entity concept, going concern concept, duality concept, cost concept, matching concept, realization concept, and accrual concept.

The primary function of financial accounting is to provide relevant financial information to users for making decisions and taking actions. The primary means of providing financial information to investors, creditors and other external users is through financial statements.

The primary financial statements include the profit and loss account, balance sheet and cash flow statement. Understanding financial statements is necessary for decision-making to all stakeholders. On completion of this chapter, we are now conversant with the objectives and components of financial statements, and the various users of financial statements.

Posted Date: 8/29/2012 2:15:26 AM | Location : United States

Related Discussions:- concept of financial accounting, Assignment Help, Ask Question on concept of financial accounting, Get Answer, Expert's Help, concept of financial accounting Discussions

Write discussion on concept of financial accounting
Your posts are moderated
Related Questions
Consider a not-for-profit hospital faced with a familiar choice: to open or not to open an emergency center in a new suburban hospital shopping mall.  The mall's developers claim t

I have an assignment due in four hours. Is it possible to get an inquiry if at least half of it can be done within that time?

Persons Who May Petition A petition may be presented by any of the following: A Creditor : A creditor may petition if his debt exceeds Shs 1,000 and is undisputed. The ord

what is the formulae for calculating Net income?

Recording Business Transactions ACCOUNT. An account is an individual record or form to record and précis information for each liability, asset, or owner's equity transactio

Choose a share from a market such as LSE, NYSE, NASDAQ, etc. [Data sources could be Datastream, Google Finance or others]. Prepare a report which involves the following aspects: -

Q. Explain about Short-term bank loans and Overdrafts? Short-term bank loans and Overdrafts. The symptom are that Vertid is unlikely to obtain further finance from its bank alt

Notsofast Inc. acquired land for $500,000 on 7/1/2010. It erroneously recorded the full amount as an expense. Explain what Notsofast must do when it discovers the error in 2011. Wh