The financial accounting, also known as general ledger or external accounting is a crucial instrument to interpret and analyze the financial situation of a company or organization. In addition, it is also a legal obligation imposed on companies. In this article you will be able to learn everything about financial accounting.
CONCEPT ABOUT ACCOUNTING
Accounting finance concept is a science that monitors changes in equity, since the formation of the company, and that can be used to monitor the financial health of the business. With this, accounting works from the collection and processing of financial information, while the company carries out its billing operations with sales, or spending on raw materials. Accounting aims is to extract relevant information to control the company’s operations, facilitate strategic planning and support decision making. All transactions in Equity (cash flow inflows and outflows, for example) are recorded by Accounting through reports.
According to Law, Accounting is mandatory for legal entities, and a business makes use of this science to determine future operational plans, review past performance and verify current functions. The financial statements analyzed by the accounting therefore serve internal and external purposes. Therefore, we say that it has two ramifications: It
is important to highlight that Financial Accounting is not only important to
the external public, as it also provides internal management with information
for forecasting, planning and decision making. Many say it is the purest form
of accounting, as proper record keeping and financial reporting provides
relevant information to third parties. As
Financial Accounting emphasizes providing a correct view of the company’s
financial position, it is mainly based on analyzes of: Financial
accounting mainly serves to provide accurate information abroad about the
company’s financial situation and results. The interpretation of data and the
respective comparison with other entities is called equity and exercise
comparability between companies, and complies with legal rules, transversal to
all entities. In Portugal, these rules are defined through the Accounting
Standardization System (SNC). Thus, as a legal obligation, financial accounting
serves to tax the profit of organizations and companies in an objective and
equitable manner, as well as a guarantee for creditors and investors, ensuring
the correct treatment of the assets of organizations and companies. Financial
accounting identifies, measures, analyzes and interprets financial information
related to the entity’s activity. It ensures the proper planning of the
business budget, the assessment of resources and answers several questions, of
which they are an example: Examples
of financial accounting are cash flows, the current account and daily records
of transactions, the financial statements of a company or organization and its
assets and liabilities and possible assets, internal and external audits,
analysis, balance sheet and statement of accounts. Following
with the understanding of what Financial Accounting is, we will observe its
main characteristics: Accounting is essential to analyze the performance of the organization, develop a strategy, make decisions effective and direct the company for further action. Already the Financial Accounting x is essential for proper maintenance of accounting and management statements. Although we have differences between them, both are used as an internal management tool, to assess the company’s performance and to present the organization’s position. We hope this article has been beneficial to you. Leave a comment telling us what you think and share with us any other knowledge that may contribute to the topic.
WHAT IS IT FOR?
CHARACTERISTICS OF FINANCIAL
ACCOUNTING
CONCLUSION:
