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
In May 2011, Your Company purchased the rights to a natural resource for $4,125,000. The estimated recoverable units from the natural resource amount to 5,500,000 units. During the

The City of Miami must replace a number of its concrete mixer trucks with new trucks. It has received two bids and has evaluated closely the performance characteristics of the seve

Q. The British Mini car was designed by a team headed by Sir Alec Issigonis in the late 1950's. Describe the process of the design of this product. Consider the context of

Construct the Market Value Balance Sheet XYZ, Inc., another company founded by Larry Davidson in 2005, is currently entirely equity financed. That means the company carries no

Critical Thinking Exercise Instructions: select a company , Wendy''s or McDonald''s . Perform a Google search, key in McDonalds or Wendys Key financial ratios. I suggest you use f

what are the types and objectives of international accounting standersds?

Great Pumpkin Farms just paid a dividend of $3.50 on its stock.  The growth rate in dividends is expected to be a constant 5 percent per year indefinitely.  Investors need a 16 per

An annuity is explained as stream of uniform duration cash flows. The payment of life insurance premium through the policyholder to the insurance company is an illustration of an a

Q. Explain the Negative Assurance? Negative Assurance - Report issued by an ACCOUNTANT based on limited procedures which states that nothing has come to accountant's attention

Ask question #EM201683STE718FACMinimum 100 words accepted#