Framework of Financial Accounting System

Process: Generally Accepted

Accounting Principles
(G.A.A.P.)

Financial Outputs:
1. Balance Sheet – Financial Position
`` Inputs – Financial Accounting as 2. Income Statement – Financial Performance
Transactions 3. Cash Flow Statement – Liquidity Position and
Information System changes in Liquidity during the period

For Whom?

1. A transaction takes place. Stakeholders:

2. It is recorded on a “Voucher” 1. Shareholders, analysts and others associated
– cash, bank, purchase, with financial markets
invoice, journal voucher 2. Suppliers
3. It is classified into 3. Financial Institutions
appropriate accounts – 4. Management/Employees
Liability, Asset, Income, 5. Statutory agencies/Regulators
Expense 6. Customers
4. It is “posted” into account
books – day books, general
ledger/ledger