Financial Accounting

Financial Accounting

Financial Accounting is a specialized branch of accounting. It keeps track of a company’s financial transactions. I It uses standardized guidelines. the transactions are recorded in addition to summarized. and presented in a financial report or financial statement such as an income statement or a balance sheet.

Bookkeeping

Bookkeeping is mainly related to identifying, measuring, and recording, financial transactions.  Accounting is the process of summarizing, interpreting, and communicating financial transactions. which were classified in the ledger account.

Financial accounting is a way for businesses to keep track. of their operations. but it also provides a snapshot of their financial health. It is required to provide data through a variety of statements. including the balance sheet and income statement. a company can give investors and lenders more power in their decision-making.

Decision Making

Financial accounting also serves for decision making of key stakeholders. as they are able to take informed decisions based upon historical and verifiable set of information. The reports moreover are prepared out of financial account is useful. for external stakeholders as well like banks, taxation authorities, licensing/registration authorities and shareholders .

The financial account is required for:

  • Owners: Owners and shareholders need financial information to help them make decisions on what to do with their investments (shares of stock), i.e. hold, sell, or buy more. Prospective investors need information to assess the company’s potential for success and profitability.
  • Corporate Compliance:after that, Corporate laws requires the companies to prepare the annual accounts, which can only be done by means of financial accounting.
  • VAT & Tax Compliance: in other words,Tax authorities also requires to have annual accounts of the taxpayers to have tax audits and reconciliation with the tax filings.
  • External Parties: moreover Bank and other lenders also requires annual accounts to have an overlook of income, expenses, assets and liabilities.

Steps involved in Financial Account are as follows:

  • Identifying and analyzing business transactions and events.
  • Recording in the Journals.
  • Posting to the Ledger.
  • Unadjusted Trial Balance.
  • Adjusting Entries.
  • Adjusted Trial Balance.
  • Financial Statements and above all.

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Financial Accounting in Dubai UAE-United Arab Emirates.