Financial accounting, Accounting Basics

It dates from the development of huge scale business and the advent of Joint Stock Company as a form of business that enables the public to participate in giving capital in return for 'shares' in the assets and the profits of the company. This type of business organization allows a bounded to the responsibility of their members to the nominal value of their shares. It senses that the liability of the shareholder for the financial debts of the company is restricted to the amount he had decided to pay on the shares he buys. He is in responsible to make any extra donation in the event of the company's liquidation or failure. As a manner of fact, the law governing the operations or functioning of such company in any country, for illustration: the Companies Act in India that gives a legal form to the doctrine of stewardship that requires which information be disclosed to the shareholders in the appearance of annual balance sheet and income statement.

Briefly speaking, the income statement is a statement of loss and profit made throughout the year of the report and the balance sheet shows the assets held through the firm and the monetary claims against the firm. The common unwillingness of the company directors to release more than the minimum information needed by law and through the growing public awareness that have forced the governments in different countries of the  world to expand the disclosure of information and needs.

The significance attached to financial accounting statements can be traced to the requirement of the society to mobilize the savings and channel them in profitable investments.

Investors, where they are small or large, should be provided along with reliable and adequate information in order to be capable to make efficient investment decisions. It is the most important social reason of financial accounting.

Posted Date: 4/2/2013 6:50:35 AM | Location : United States







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

Write discussion on Financial accounting
Your posts are moderated
Related Questions
Examine each of the items listed below to determine which items include statements that 3) would indicate that manufacturing diversity exists. Required: Label the items that inc

What is the full disclosure principle

Which error will cause a trial balance not to balance? A an invoice entered as a credit note on original input. B a journal entry that does not balance. C a transaction entere


Q. What do you mean by Not-for-profit organizations? Not-for-profit organizations such like charities, fraternities, churches, and universities need accountants to record and a

Q. Gain and loss recognition principle? The gain and loss recognition principle states that we record gains merely when realized but losses when they first become evident. Ther

The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. NELSON COMPANY Unadjusted Trial Balance January 31, 2013 Debit Credit Cash $

“Ledger is said to be the principal book entry and the transactions can even be directly entered into the ledger account.” Elaborate and explain why journal is necessary.

Q. Show Debit and Credit column? - Debit column. In the debit column the sum of the debit is on the same line as the title of the account debited. - Credit column. In the cr

Determine the symbols of Net Sales for the Period -    Cost of Goods Sold =    Gross Profit -    Operating Expenses +    Other Income -      Other Expenses =