Financial Accounting is a systematic tracking of company's financial transactions. The transactions are recorded, summarized, and presented in Financial Statement of Accounts which is a technical publication which provides a view of the income and expenditure for the year. Financial accounts are part of the company’s accounting system. Companies often use accounting as a way to keep score. Small businesses often find it important to keep score since accurately tracking financial information is the best way to determine the effectiveness and efficiency of their operations. Financial accounts can also provide historical records for making future business decisions.
Financial Accounting Tasks Included
• Accounts Payable
• Accounts Receivable
• Payroll Processing
• Management Accounting
• Tax Preparation
Financial Statement Reviews
Financial accounts allow companies to develop financial statements. Rather than reviewing each individual account for trends and other analysis, financial statements allow companies to conduct a review of financial information.
Many companies develop operating budgets for their operations. Budgets are usually created by reviewing historical information from various financial accounts and attempting to forecast whether these numbers will decrease, stay the same or increase in future operations. Budgets create a financial roadmap that companies can use when making business decisions.
Track Cash Management
Financial accounts allow companies to purchase economic resources, goods or services on account from other businesses. These purchases represent trade credit in the business environment. Companies use accounts payable and accounts receivable financial accounts to keep track of this information. Accounts payable represents all money owed to other businesses for resources purchased. Accounts receivable includes all money not collected from consumer purchases. Managing trade credit is an important cash management process. Companies use financial accounts to determine how much money currently resides in their bank account, how much money they must pay vendors or suppliers and how much money they need to collect from consumers.