The process of preparing financial statements for the business is basically what we all know as financial accounting. It is extremely helpful in keeping the proper record of your business. It also helps you to figure out all the financial expenses related to the company as well. There are simply three types of statements that come under the category of financial accounting. These are the statement of cash flow, income statement, and the balance sheet. The purpose that is served by these statements is: to create the current financial position report of the company and to keep the record of the progression that the company has made over a period of time. The investors and the creditors find are found to be keenly interested in this kind of information; as it provides them the idea of the loss of the profit that a business is going through. Sincere help is considered to be taken from the financial accountants. They are able to distinguish between a correct and incorrect account statement. Also, they will help you to understand the account statements in the simplest possible manner. They can also easily provide you the accounting assignment help.
Key terms you need to know about financial accounting
For sure not everyone is well aware of the terms and definitions related to financial accounting. To be a part of the financial accounting class or even to get accounting assignment help you need to know the basics. Here are some of the widely used accounting terms and phrases that are meant to help you out.
The users of the financial accounting information
These are the people who need to see all the accounting transactions that are happening. They usually prefer to see the transaction in an organized manner and arranged into certain financial statements. This helps them out to take more informed decisions regarding the investments required to be made; or else the loan amount that the company requires.
The basic characteristics of the financial information
- Relevant: the information should possess the direct connection to the facts that are being tried to understood or evaluated.
- Reliable: the information should be dependable enough to guide you in the right direction.
- Comparable: the information should be of high quality. This will surely make easy to spot the similarities or the differences between all the companies that are being evaluated.
- Consistent: the same kind of accounting treatment should be made for all the similar kind of transactions that takes place.
Generally accepted accounting principles (GAAP)
It simply refers to the set of rules that the financial accountants are required to follow while preparing the financial statements and accounting the transactions. These rules are even taught by the accounting tutor online. The numbers just cannot be thrown on the statements it has to be done in a proper systematic manner. The GAAP simply guides the accountants regarding the procedure that must be followed while they are doing their job. To get the excellence in the financial accounting it is required for you to be very well thorough with GAAP.
Chart of accounts
It basically deals with a general list of all the accounts that are set up for handling the transaction of all the company’s accounts. These accounts are normally numbered in an ascending order. These numbers start from 1000 and go up to 9000. Here 1000 representing the assets while 9000 representing the miscellaneous loss and gain the company faces.
This is meant to keep the proper record of all the financial transactions that happened during a specific accounting cycle. All of these transactions are kept in an order of the account numbers.
It is the claim that says that the shareholders of a particular corporation hold the net assets of the company. There are three main components of the stockholder’s equity.
it refers to the money that is invested in the business by the shareholders.
These are the stocks that initially belong to the company but are later brought back from the other investors.
it refers to the net loss or income that company gets on the first day of its business according to the date mentioned on the balance sheet.