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Running Head: Financial Accounting
Running Head: Financial Accounting
Financial Accounting
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Financial Accounting
Executive Summary
Financial accounting is a field of accounting concerned with the analysis, reporting and the
summary of the financial transactions referring to the business. Financial accounting is utilized to
prepare the accounting information for a group outside the firm or not involved in the daily
running of the company. Managerial accounting offers accounting information or data to assist
managers to make appropriate decisions to handle or manage the firm’s business. Financial
accounting involves the research of financial statements obtainable for the public consumption.
This report highlights the regulations and principles relating to consultancy and rules as well as
Contents
Financial Accounting.......................................................................................................................4
Regulation related to financial Accounting.....................................................................................5
Accounting rules & principles.........................................................................................................5
Conventions and concepts relating to consistency and material disclosure....................................6
References........................................................................................................................................8
Financial Accounting
Financial Accounting
Financial accounting is a process for preparing the financial statements. Companies are used to
present their financial positions and performance to outsiders including creditors, suppliers,
accounting, while management accounting involves preparing forecasts and detailed reports for
the company's internal management staff. Financial accounting also includes a process of
recording, aggregating, and reporting the countless transactions that result from company
operations over time (Xie, 2015). These transactions are then summarized in a preparation of the
financial statements, such as balance sheets, cash flow and income statements, which cover the
firm's operating performance during a specific period of time. Financial accounting adopts a new
principles in the financial accounting process depends on reporting and the regulatory
requirements that companies face. For listed companies in the US, companies need to conduct
financial accounting according to GAAP. International listed companies also regularly reporting
accounting standards or principles provides consistent information for investors, regulators, tax
authorities and creditors (Flesher, Flesher & Previts, 2018). Financial reports occur through the
usage of the financial statements. Financial statements list the five major categories of the
financial data: income, expenses, resources, equity, and liabilities. Income and operating cost are
calculated and reported in the income statement. Assets and liabilities and fair play accounts are
always reported on a balance sheet. Balance sheet uses financial accounting to account
An important part of professional regulations and corporate law requirements is to make sure that
the proper details are provided in an easily understandable layout to meet the needs of various
users. These regulations and rules must be discussed briefly in the advanced financial
accounting. It must be clear that the data provided in advanced financial and financial accounting
are combined to describe the financial accounting procedure in detail. The company must be
Advanced financial accounting exams are likely to include areas covered by financial accounting
(Musilek, 2012). When a person chooses to start a business, the company can proceed in any of
the following ways: sole proprietors, partnerships, limited companies or European companies. A
company operates within Europe and is governed by EU law and applies directly to member
states instead of national laws. Deciding which media can conduct business depends on many
factors. Conducting a business through every type of commercial entity has disadvantages and
Accounting principles basically are some rules plus guidelines that company has to follow when
reporting the financial data. General U.S. accounting guidelines or principles is GAAP. To
continue listing on many of the main stock exchanges in the US, the company should
periodically submit financial statements in accordance with U.S. General Accounting Standards.
Accounting principles vary from nation to nation. Due to the different accounting principles in
different parts of the whole world, investors must exercise concern when comparing firms from
Financial Accounting
diverse countries (Habib, Ranasinghe & Huang, 2018). The issues of differences in the
accounting principles are not a problem in the mature markets. However, investors must be
careful because, under many accounting standards, the misrepresentation of the figures still
exists. The professional accounting world is governed by general concepts and rules and is called
basic accounting guidelines and principles. Together they simply form the basis for more
The debit payee, credit giver: This principle is utilized for personal accounts. Also when person
organizes something, it becomes inflow, so this person must have credit on the books. The
opposite is true, that is why receivers need to be debited (Strouhal, Paseková & Müllerová,
2011).
Debit content loaned content: This principle applies to real account situations. Real accounts
include machinery, buildings, and land etc. They default to a debit balance. Therefore, when you
borrow cash, you will increase the accessible account balance. This is closely what desires to be
complete. When corporate credit goes out, then they are dropping the account balances when
Debit all fees and losses, credit income and benefits: Apply this rule when the problematic
account is a supposed account. The company’s capital is a responsibility. So it also has a non-
payment credit balance. When companies classify all the benefits and benefits, they increase
capital and debt costs and losses, furthermore reduce capital. This is just what the system needs
to do to maintain balance.
Accounting practice refers to the practice generally followed when presenting and recording
accounting information for business entities. They follow customs, traditions, etc. in the society.
Financial Accounting
Accounting practices have evolved over the years through consistent and regular practices in
order to have a unified record in the accounts books (Hazera, Quirvan & Triki, 2017).
Accounting practices help compare accounting data for diverse business units and units in
diverse periods. These have also been developed for many years. The significant conventions
that have been utilized for a long time are coherence conventions, the full disclosure of
Convention, similar accounting method should be used every year when preparing few financial
statements. However, this does not imply that once a specific accounting method is adopted, it
can’t be changed. Whenever the method changes, it must be disclosed in footnotes in financial
statements for the current year. Consistency practice means that the similar accounting principles
must be used to prepare financial statements every year. If company compares them periodically,
they can draw meaningful conclusions from the same company's financial statements. However,
this is only possible if the accounting practices and policies followed by a company are reliable
and consistent over time (Collins, Pasewark & Riley, 2012). If diverse accounting practices and
procedures are used to compile financial statements for different years, the results will not
ignored, and all essential things must be disclosed. Important items are important items. For
example, U.S. GAAP states that if the project “may affect the financial decisions of users of
financial statements”, the project is substantive. The “major convention” stipulates that in order
to make the financial statements significant, users who only provide important relevant
information and accounting information here are an important fact. The nature of the fact based
References
Arthur, A. (2009). Principles and rules: the open question argument and normative imperatives.
Collins, D., Pasewark, W., & Riley, M. (2012). Financial Reporting Outcomes under Rules-
Flesher, D., Flesher, T., & Previts, G. (2018). The Financial Accounting Standards Board:
Habib, A., Ranasinghe, D., & Huang, H. (2018). A literature survey of financial reporting in
Hazera, A., Quirvan, C., & Triki, A. (2017). Too big to fail and bank loan accounting in
developing nations: Evidence from the Mexican financial crisis. Research In Accounting
Musílek, P. (2012). Hedge Funds and their (Non)regulation. European Financial And Accounting
Strouhal, J., Paseková, M., & Müllerová, L. (2011). Comparative Analysis of Czech Accounting