concept of financial accounting, Financial Accounting

Assignment Help:

  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.


Related Discussions:- concept of financial accounting

Benefits of common stock and preferred stock, Evaluate the following statem...

Evaluate the following statements, and explain why you agree or disagree. (a)    In a recent interview, a Wall Street investment banker commented on the infrequent use of Prefer

Consolidated balance sheet-group accounts, CONSOLIDATED BALANCE SHEET T...

CONSOLIDATED BALANCE SHEET The consolidated balance sheet involves adding assets and liabilities of the subsidiary to those of the holding company while excluding inter-company

Total prime cost, Interstate Manufacturing produces brass fasteners and in...

Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended: Materials and supplies used Brass

Discuss the interest rate parity, Below is information about the spot and f...

Below is information about the spot and forward rates for three currencies against the US dollar (USD): Currency (exchange rate) Spot Rate Six-month forward rate Euro (EUR)

What do you understand by tax court, Q. What do you understand by Tax Court...

Q. What do you understand by Tax Court? Tax Court - U.S. Tax Court is a legislative court functioning to adjudicate controversies between taxpayers and IRS arising out of defic

Determine annual effective cost, Q. Determine Annual effective cost? (...

Q. Determine Annual effective cost? (i) Payables policy One month cost of taking extended trade credit = 1.5/98.5 = 1.52% Annual effective cost = 1.015212-1 = 19.8%

Capital recovery factor, Equation illustrates the relationship in between P...

Equation illustrates the relationship in between PVA n , A, K and n. So manipulating this a bit: We find that A = PVA n [(k (1 + k) n )/((1 +k) n - 1)] [(k (1 + k) n )/(

Illustrate management of commercial and political risk, Q. Illustrate Manag...

Q. Illustrate Management of commercial and political risk? Commercial risk comprises both the physical risk that goods in transit may be lost stolen or destroyed as well as the

Asset Allocation, In January 2013, Mitzu Co. pays $2,600,000 for a tract of...

In January 2013, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to demolish Building I and build a new store in its place. Building 2 will be a co

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd