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    Financial Accounting

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    hiteshjaggi
    Financial accounting involves recording, classifying, and summarizing business transactions to determine profit or loss over time and the financial position of a business. It allows businessmen to evaluate performance and make informed decisions. Bookkeeping is the process of recording financial data, while accounting provides a meaningful summary and interpretation of the results to permit judgement by users. Some basic terms include debtor, creditor, equity, drawings, and turnover.

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    Financial Accounting

    Uploaded by

    hiteshjaggi
    21 views1 page
    Financial accounting involves recording, classifying, and summarizing business transactions to determine profit or loss over time and the financial position of a business. It allows businessmen to evaluate performance and make informed decisions. Bookkeeping is the process of recording financial data, while accounting provides a meaningful summary and interpretation of the results to permit judgement by users. Some basic terms include debtor, creditor, equity, drawings, and turnover.

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    Financial accounting involves recording, classifying, and summarizing business transactions to determine profit or loss over time and the financial position of a business. It allows businessmen to evaluate performance and make informed decisions. Bookkeeping is the process of recording financial data, while accounting provides a meaningful summary and interpretation of the results to permit judgement by users. Some basic terms include debtor, creditor, equity, drawings, and turnover.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    21 views1 page

    Financial Accounting

    Uploaded by

    hiteshjaggi
    Financial accounting involves recording, classifying, and summarizing business transactions to determine profit or loss over time and the financial position of a business. It allows businessmen to evaluate performance and make informed decisions. Bookkeeping is the process of recording financial data, while accounting provides a meaningful summary and interpretation of the results to permit judgement by users. Some basic terms include debtor, creditor, equity, drawings, and turnover.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Financial Accounting:

    Introduction:
    The main aim of the business is to earn profit. At any given point, the businessman
    would be very anxious to know the financial position of the business and the information is
    used for planning, control, evolution of performance and decision making. Therefore it is
    very important that the business transactions are recorded, classified, and summarised
    properly.

    Book-keeping:
    It is the art and science of recording, classifying and summarizing business
    transactions in money so that the businessman can know the profit or loss in given period of
    time and his financial position at particular date.

    Accounting:
    The American institute of certified public Accountants has defined the financial
    accounting as the “the art of recording, classifying and summarising in significant manner in
    terms of money transactions and events which in part, at least of financial character and
    interpreting the results thereof.”

    American Accounting Association defines accounting as the “the process of


    identifying, measuring and communicating economic information to permit informed
    judgements and decisions by user of the information”.

    Basic terms:
     Debtor: A debtor is a person who owes money. The amount due from him is called
    debt.
     Creditor: A person to whom money is owing or payble is called creditor.
     Equity: A claim which can be enforced against the assets of the firm is called equity.
    In other words, the rights to properties are called equities. Equities are of two types:
    the right of creditors and the right of owners. The equities of creditors represent debts
    of the business and are called liabilities. The equity of the owners is called capital,
    proprietorship or owner’s equity. Thus,
    Assets = Liabilities + Capital
     Drawings: Any amount or goods withdrawn by the owner of a business for personal
    use is called drawings.
     Turnover: It means total trading income from cash sales and credit sales.

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