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Financial Accounting
Financial Accounting
ACCOUNTING EQUATION
Financial Accounting :
Financial accounting is a field of accounting that involves the recording, summarising, and
reporting of a variety of transactions arising from corporate operations throughout time.
These transactions are summarised in the creation of financial statements, such as the balance
sheet, income statement, and cash flow statement, which document the company's operating
performance over a given period.
Financial accountants can work in both the public and private sectors. The responsibilities of
a financial accountant may differ from those of a general accountant, who works for himself
rather than for a corporation or organisation.
Financial Terms :
Financial accounting is the branch of accounting that deals with the summarization, analysis,
and reporting of a company's financial activities. This entails the creation of publicly
accessible financial statements. Accounting uses a variety of terminology, some of which are:
1. Accounts Payable :
The money owed by a company to its suppliers, vendors, or creditors for goods or
services purchased on credit is known as accounts payable. A short-term debt that
must be paid back quickly to avoid default, accounts payable shows up as a liability
on an organization's balance sheet. When a restaurant receives a meat order on credit
from an outside source, this is an example of accounts payable.
2. Accounts Receivable:
The money owed to a company by its clients for goods or services given is known as
accounts receivable. When a meat supplier delivers meat orders to a restaurant on
credit, this is an example of accounts receivable. While the restaurant accounts
payable for the transaction, the meat supplier accounts receivable as a current asset on
its financial sheet.
3. Assets:
Accounts receivable refers to the money owing to a firm by its customers for goods or
services provided. Accounts receivable is what happens when a meat supplier delivers
meat orders to a restaurant on credit. While the restaurant records the transaction as
payable, the meat supplier records the transaction as a current asset on its balance
sheet.
4. Dividends:
Dividends are payments made by a corporation to its shareholders in exchange for
their investment in the firm's stock. Dividends can be paid in cash or in the form of
extra equity. Dividends may be paid on a regular basis or on a one-time basis. Mutual
funds and exchange-traded funds both pay dividends.
5. Balance Sheet:
Balance sheets are financial documents that show the obligations, assets, and
shareholders' equity of an organisation at a certain point in time. Balance sheets are a
sort of financial statement that is used to assess a company's financial health and
value. To produce balance sheets, accountants apply the accounting equation:
'Assets = Liabilities + Equity.'