Answer to Question #124554 in Accounting for muhammad hasnain

Question

Q.No.1) Briefly explain the following concepts with examples. (Marks 04)
a.)
Financial accounting is a specialized branch of accounting that keeps track of a company's financial transactions. Using standardized guidelines, the transactions are recorded, summarized, and presented in a financial report or financial statement such as an income statement or a balance sheet. What are the main objectives of financial accounting

Answer 1

The primary role of financial accounting is to keep record for purposes of maintaining accurate and complete records, which could be retrieved when need be. There are various financial statement such as the balance sheet, that shows the financial position of an organization while the income statement shows the revenue and expenditure of an organization.

Such information can be used to determine the tax to be remitted to tax authorities.

Standardized guidelines ensures the financial statements from all organization use same procedure to account for the expenses and revenues, hence making comparability easier.

Financial accounting is important in organization planning for competing resources , such as labor and raw materials. Therefore it helps in making decision on what should be considered first. Additionally, it is also important in determining the performance of a business, through revenue and sales generated by the business, by using the income statement, the business can know whether they are doing better in relation to previous income statement, and also compare with the competitors.

References

Mclaney, Eddie. & Peter, Atrill. (2018). Accounting and Finance: An introduction. 9 edn. Pearson