Financial accounting is one of the most important branches of accounting knowledge to be used to enable any user to use an accounting program to facilitate the productive operations of the institution or establishment
Financial accounting definitions
There are many definitions of financial accounting and we will mention some of the current definitions
Is the most important accounting system that is interested in accounting information related to the list of financial position and cash flow and income statement in accordance with the agreed accounting standards that belong to companies and this information is available to decision makers, whether inside the company or abroad.
Is the main branch of accounting. It is concerned with the recording and classification of financial transactions in order to obtain summarized financial statements for the benefit of decision makers such as the owners of the establishment
Is a set of hypotheses, rules and scientific principles that govern the process of recording and tabulating the financial operations related to a particular company based on a set of documents, books and financial lists to determine the results of the company’s activities for a certain period and photograph the financial position on a specific date
Accounting is a means of providing financial information to the management and others to enable them to make their economic decisions, namely the owners of the company, investors and trade unions, chambers of commerce, and various government bodies .Accounting is also useful in managing the project in many areas, such as assisting in the planning and formulation of policies and the identification of financial centers for clients with the company and other services
Is one of the branches of accounting, which is responsible for recording, categorizing, summarizing, interpreting and communicating financial information pertaining to public shareholding companies. This information is available to the owners of the company
Financial Accounting Objectives
The main objective of financial accounting is to prepare the final financial statements to achieve the following:
Determining the results of the company’s business, whether profit or loss, over a certain period, which requires the availability of real data on revenues during that period and the availability of data on income-related expenses, and the profit or loss is determined by comparing the income with expenses.
The financing of the project (represented by capital, liabilities and other credit balances), and the uses of the funds invested in the project (represented in fixed assets, current assets and other receivables).
As for the rest of the goals
Providing information that is useful in rationalizing investment and credit decisions with the need to formulate them so that they can be understood and understood by users to learn and absorb economic activities.
Provide information useful in estimating the amount and timing of future cash flows.
Provide information useful in assessing the resources of the entity and its obligations and changes in these resources and obligations.
To provide information useful in assessing the performance of the company and determining its profits using the profitability criteria based on the basis of maturity, which gives a better indicator of monetary profitability measures, because it determines the size of the achievements for the financial period.
Provide information useful in determining the degree of liquidity or insolvency and cash flows.
To provide information in the report on the extent of the management’s performance and its success in maintaining the resources of the company and the efficiency with which these resources are managed.
Provide information related to management’s observations and explanations to understand what is presented in the company’s financial reports
The concept of financial operation
The events of the company with the financial value that affect the accounts and financial statements, which are between two parties and can be measured objectively, and are recorded in books and records and examples of such events by the company to purchase the requirements of production or sale of products.
Financial Accounting Features
Are mandatory according to the law. The financial statements are prepared regularly and periodically at the end of each period.
Provide only financial information (income – expenses – assets – obligations).
Provides overall information that helps assess the performance of the enterprise as a whole.
Financial statements produced by financial accounting are subject to review and examination by the external auditor.
It produces accurate information that has been reviewed by an external auditor and therefore requires sufficient time to produce this information for several months after the end of the financial year.