Financial Accounting/Ivan-Cavric

1. Financial Accounting/Ivan-Cavric Financial accounting is the process of recording,condense and reporting the mass of transactions resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements, including the stability sheet, income statement and cash flow statement, that enclose the company's operating performance over a specified period. BREAKING DOWN 'Financial Accounting' Financial accounting utilizes a series of accepted accounting principles. The selection of accounting principles to use during the course of financial accounting depends on the regulatory and reporting requirements the business faces. For public companies in the United States, businesses are required to perform financial accounting in accordance with Generally Accepted Accounting Principles (GAAP). International public companies also frequently report financial statements in accordance to International Financial Reporting Standards. The establishment of these consider principles is to provide consistent information to investors, creditors, regulators and tax power. Accrual Method Vs. Cash Method Financial accounting may be performed using either the accrual method, cash method or a combination of the two. Accrual accounting entails recording transactions when the transactions have occurred and the revenue is noticeable Cash accounting entails recording transactions only upon the exchange of cash. Revenue is only recorded upon the receipt of payment, and expenses are only recorded upon the payment of the contract. Financial Accounting Reporting Financial reporting occurs through the use of financial statements. The financial statements present the five main classifications of financial data: revenues, expenses, assets, liabilities and equity. Earning and expenses are accounted for and reported on the income statement. Financial accounting results in the determination of net income at the bottom of the income statement. Assets, liabilities and equity accounts are reported on the balance sheet. The balance sheet utilizes financial accounting to report ownership of the future economic benefits of the company.

2. Financial Accounting Vs. Managerial Accounting The key difference between financial and managerial accounting is that financial accounting aims at providing information to parties outside the organization, whereas managerial accounting information is aimed at helping managers within the organization make decisions. Financial statement preparation using accounting principles is most relevant to regulatory organizations and financial institutions. Because there are numerous accounting rules that do not translate well into business operation management, different accounting rules and procedures are utilized by internal management for internal business analysis. Accounting Certifications The most common accounting designation reveal an ability to perform financial accounting within the United States is the Certified Public Accountant (CPA) license. Outside of the United States, holders of the Chartered Accountant (CA) license reveal the ability as well. The Certified Management Accountant (CMA) designation demonstrates more an ability to perform internal management functions than financial accounting. Compete, Risk Free with $100,000 in Virtual Cash. Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business, and it also refers to the process of summarizing, analyzing and reporting these transactions to oversight agencies and tax collection entities. Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by decent finance departments with dozens of employees at large companies. BREAKING DOWN 'Accounting' The reports generated by various streams of accounting, such as cost accounting and management accounting, are invaluable in helping management make informed business decisions. While basic accounting functions can be handled by a bookkeeper, advanced accounting is typically handled by qualified accountants who possess designations such as Certified Public Accountant (CPA) in the United States, or Chartered Accountant (CA), Certified General Accountant (CGA) or Certified Management Accountant (CMA) in Canada.

3. Creating Financial Statements The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are concise statements based on thousands of financial transactions. As a result, all accounting designations are the climax of years of study and diligent examinations combined with a minimum number of years of practical accounting experience.