Financial Accounting – Explained
What is Financial Accounting?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Table of ContentsWhat is Financial Accounting? How Does Financial Accounting Work?Example of How Financial Accounting is UsedConclusion
What is Financial Accounting?
The definition of accounting through the AICPA is the art of recording classifying and summarizing in a specific manner in terms of money transactions and events, which are in part at least of financial character, and interpretation or interpreting the result thereof.
How Does Financial Accounting Work?
The more basic definition, is an information in measurement systems that really does three things they identify, they record, and they communicate information about an organization's business activity. So in those three things the identify, the records, and communicates those are very important because identifying is really identifying whether you should record it then if you do need to record it then obviously you record it, and then the last piece is being able to communicate it to the end user.
Example of How Financial Accounting is Used
So if you think about this from a sports reference a baseball statistician would be really kind of like an accountant because they identify the ability to do they need to write this down, is their player coming up to back, if they're not then they don't do anything but if they are then they need to start recording and then they record it in their own manner in the playbook or in the in the what's it called the stat book I guess you will if you will, and they'll say k if this is a strikeout or backwards k whatever or they made it the first or what not that's their recording of it, and then they have to communicate it to the end user which for them would be the general manager the general manager doesn't really want to see that book they want to see different stats, so how are they batting how are they batting against lefties, how are they batting against writings, how many strikeouts have they had, how many bats have they had they got to put it in a way that can communicate it to the end user.
And so that's really what an accountant does is they identify whether they should write it down or record it then they do record it if they need to and then they are able to turn it into a way that communicates to the end user to allow them to use it for the best to the best ability they can.