Financial Accounting Basics

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Description

This lecture introduces the fundamental concepts of financial accounting, covering topics such as the accounting process, types of accounting information, the role of an information system, and the basic functions of an accounting system. It also delves into the definition of accounting, the development of a conceptual framework, external and internal reporting, and the integrity of accounting information. The instructor explains the objectives of external financial reporting, the concept of a business entity, types of business entities, and provides an overview of financial statements like the balance sheet, income statement, and statement of cash flows.

Official source

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Financial accounting

Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business. This involves the preparation of financial statements available for public use. Stockholders, suppliers, banks, employees, government agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes. Financial accountancy is governed by both local and international accounting standards.

Accounting

Accounting, also known as accountancy, is the processing of information about economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used as synonyms.

Creative accounting

Creative accounting is a euphemism referring to accounting practices that may follow the letter of the rules of standard accounting practices, but deviate from the spirit of those rules with questionable accounting ethics—specifically distorting results in favor of the "preparers", or the firm that hired the accountant. They are characterized by excessive complication and the use of novel ways of characterizing income, assets, or liabilities, and the intent to influence readers towards the interpretations desired by the authors.

Finance

Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, which is the study of production, distribution, and consumption of money, assets, goods and services (the discipline of financial economics bridges the two). Finance activities take place in financial systems at various scopes, thus the field can be roughly divided into personal, corporate, and public finance.

Management accounting

In management accounting or managerial accounting, managers use accounting information in decision-making and to assist in the management and performance of their control functions. One simple definition of management accounting is the provision of financial and non-financial decision-making information to managers. In other words, management accounting helps the directors inside an organization to make decisions. This can also be known as Cost Accounting.