In modern days, the scope of accounting is not confined only to the ascertainment of profits or losses of a business during a particular accounting period. Rather, its scope has widened to other areas as well such as providing useful information to the management which helps them in decision making and drafting their future plans. So, in order to fulfill the various requirements of management, accounting can be classified into different branches. Let’s talk about Financial Accounting.
Financial Accounting is mainly concerned with identifying the transactions of monetary nature and their recording within the books, classifying, summarising, and communicating the business results. The main focus of this branch of accounting is to determine the profit or loss of a business by preparing a Trading and Profit and Loss Account. This also helps in assessing the financial position at the top of an accounting period by preparing the record. It also provides useful information to the management and to various other parties interested in the business. Financial accounting starts with a recording of business transactions in the books and ends with preparing the financial statements of the business.
What is Accounting?
Accounting, in simple terms, is the recording of various transactions, that took place during a particular period, in the books of accounts in a systematic and proper manner.
Basis of Accounting
After going through this lesson, you will get a detailed concept of the following Basis of Accounting. Cash and Accrual Basis of Accounting,
Importance of IFRS
Importance of IFRS – IFRS helps the economies of the world to establish global harmony, uniformity, and comparability in the process of preparation of their financial statements.