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Brief Introduction of Financial Accounting

In: Business and Management

Submitted By monamouryuer
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Brief introduction of financial accounting
This essay will just briefly make an introduction to financial accounting by answering four questions. Firstly the paper will discuss the objective of financial accounting, and then will make explanation on relevant information. Also the users of financial accounting will be mentioned in the third part, then after the reason why financial market needs accounting reports, we will get to the conclusion.
What is the major objective of financial accounting?
“Financial accounting may be defined as the process of designing and operating an information system for collecting, measuring and recording an enterprise’s transactions, and summarizing and communicating the results of these transactions to users to facilitate making financial economic decisions”(Andrew Thomas, 2005)
The first part of this explanation involves in collecting and recording business transactions. And it is specifically called the double entry bookkeeping. One of the objectives is to record and control as well as classifies those financial transactions, and normally, this process is done by a computer in modern society. Secondly the objective is about preparing and summarizing relevant information to financial statements income statements trail balances and many other financial statements. These statements can be significantly helpful for the information users. (Andrew Thomas 2005)
According to Andrew Thomas (2005) the above two function can be further separate into several detailed parts as stated below due to the worlds limit we cannot do deeper explanation.
The recording and control of business transactions
To maintain accuracy in recording
To meet the requirements of the law
To present final accounts to the owners of the business
To present other financial reports and analyses
To facilitate the efficient allocation of resources
What is relevant...

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