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Financial Accounting Assignment: Conventions & Concepts

   

Added on  2020-06-04

7 Pages1571 Words60 Views
Financial Accounting

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Q1. Concept of financial accounting......................................................................................1Q2. Regulations related to financial accounting.....................................................................2Q3. Rules and principles of accounting..................................................................................3Q4. Convention and concepts to consistency and materiality disclosure...............................4CONCLUSION................................................................................................................................4REFERENCES................................................................................................................................5

INTRODUCTIONFinancial accounting is an essential part of every business organisation to manage theircore operations. It is necessary for managers to have certain system that can help them to recordand summarise there regular transactions in an effective manner. This project report consists ofvarious accounting rules and principle are explain clearly. Certain conventions and concepts thatare related with the materiality and consistency disclosure are elaborated in this report as well.Q1. Concept of financial accountingAccounting is a systematic procedure of determining, recording, summarising, classifyingand interpreting financial data. It will be helpful in evaluating profit and loss for the given periodof time. Financial accounting is the branch of accounts that keeps record of company's financialtransactions in a sequential manner. It consists of preparation of financial statement that isavailable for public consumptions. It is associated with the formulation of reports such as incomestatements, balance sheet and cash flows statements ((Edwards, 2013)). Financial accounting ishaving the most common rules such as accounting standards that are based on GAAP (Generallyaccepted accounting principles). It involves accounting aspects that are related with reporting offinancial transactions concerned with the business enterprises.“Financial accounting is a detailed information system that provides reports tostakeholders regarding the economic activity and situation of a business position.” (WarrenReeve)Purpose:The primary objective of accounting is to deliver information that is required for thesmooth economic decision making of an organisation (May, 2013). The preparation of finalreport can be help to determine firm’s performance to outside parties such as investors, taxauthorities and creditors etc. Scope: It deals with the examination of accounting and its related concepts that financialstatements and formulate the ability required to evaluate these statements more effectively. Itwill help the managers to increase knowledge of management to make reporting outcomes ofbusiness events in attaining maximum profitability. Function of financial accounting:1

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