Financial Accounting and Reporting

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To provide financial information that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the reporting entity. [3] Balance sheets provide a snapshot of a company’s assets, liabilities, and equity at a specific point in time. Another name is the “Statement of Financial Position”. Asset, expense, and dividend accounts have normal debit balances (i.e., debiting these types of accounts increases them).

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The statement can be used to help show the financial position of a company because liability accounts are external claims on the firm's assets while equity accounts are internal claims on the firm's assets. The manual process involved in the above paragraph no longer bothers most businesses as the system has been fully automated. What many bookkeepers now learn is how to manipulate the computers and other gadgets used in performing this.Ascertainment of the financial position of business: businessman is not only interested in knowing the result of the business in terms of profits or loss for a particular period but is also anxious to know that what he owes (liability) to the outsiders and what he owns (assets) on a certain date. To know this, accountant prepares a financial position statement of assets and liabilities of the business at a particular point of time and helps in ascertaining the financial health of the business. We can imagine a conductor directing when each musician plays (a financial transaction or economic event) to orchestrate an experience that exceeds that of individual sounds. Periodically, usually at the end of a financial period, financial transactions are summarized into quarterly or annual financial statements. These statements provide a snapshot of the company’s financial position and performance during the accounting period. Financial statement reporting includes the balance sheet, income statement, and cash flow statement. Imagine it as a musical performance. Lehner, O, Leitner-Hanetseder,, S & Eis, C 2019, ‘The whatness of digital accounting: status quo and ways to move forward’, ACRN Journal of Finance and Risk Perspectives 8 Special Issue Digital Accounting (2019), pp. I -X, < http://www.acrn-journals.eu/resources/editorial_si.pdf> The importance of accounting, especially financial accounting resolves around enhancing the quality of decision that we make. Both internal and external users of accounting information rely on financial accounting to provide them with information about a company that would otherwise not be available. Business analysis and fundamental analysis used for business valuation would be very difficult if not for the role of financial accounting in provided some of the information. Accounting gives us an idea of the sources of finance and how they are used in the daily activities of business.

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Barth, ME, Li, K and McClure, C 2021, ‘Evolution in value relevance of accounting information’, (March 2, 2021). Stanford University Graduate School of Business Research Paper No. 17-24, To know the solvency position: by preparing the balance sheet, management not only reveals what is owned and owed by the enterprise, but also it gives the information regarding concern's ability to meet its liabilities in the short run (liquidity position) and also in the long-run (solvency position) as and when they fall due. Financial Reporting Council 2020, Financial Reporting Council annual report 2019-20, . Investors believe in a company’s potential. They deploy their capital in pursuit of growth and profit. Financial accounting gives them the financial information to assess a company’s health. A manufacturer’s financial reports may showcase products selling well and needing further production capacity. This data-driven decision making enhances the company’s credibility when seeking expansion of productive capacity. 6. Customers: Trust and AccountabilityTry to avoid writing endless notes on the accounting standards – applying the knowledge to scenarios in questions is much more productive The unit of measure in accounting shall be the base money unit of the most relevant currency. This principle also assumes the unit of measure is stable; that is, changes in its general purchasing power are not considered sufficiently important to require adjustments to the basic financial statements." [10]

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The accounting bodies of each country establish domestic standards, for example, the Financial Accounting Standards Board ( FASB ) in the US and the Accounting Standards Board ( AcSB ) in Canada. Investors – Before putting their money into a company, investors often seek reports prepared using financial accounting to understand how the company has been doing and set expectations about the company’s future.Accrual accounting allows users to experience the financial performance of the business. In this way, an orchestral performance and a company’s financial reports (such as the balance sheet, income statement, and cash flow statement) are alike. 2. Cash Accounting Fred., Phillips (2011). Fundamentals of financial accounting. Libby, Robert., Libby, Patricia A. (3rded.). Boston: McGraw-Hill Irwin. ISBN 9780073527109. OCLC 457010553. Assessment 2: This assessment task will require students to solve and answer problem and/or case study-based accounting scenarios. The purpose of the second assessment is to develop student’s knowledge and skills in determining how varying economic events affect accounting. Teams are formed that make an innovative verbal presentation. Merchandise inventory - consists of goods and services a firm currently owns until it ends up getting sold