Finance and Accounting Concepts Essay Example | Topics and Well Written Essays - 2000 words

Finance and Accounting Concepts - Essay Example It consists of financial activities which include collecting, recording, analyzing and communicating the financial information to others. The financial data is a collection of facts which is expressed in numerical symbols and characters. The major task of the accountant is to records the financial transactions and converts data into financial information. The study will deal with the various accounting concepts that have helped the accountants in dissemination of financial information. Accurate financial presentation helps in the systematic recording of the financial transactions and also helps in identification of errors in the accounting procedure. The author of the study will able to give an insight into the basic accounting concepts and its impact on the business activities. Finally, the study will conclude with the various accounting concepts and its practical applications. Accounting Concepts & Procedures Accounting is definitely concerned with the recording of transactions tha t affect the business activities and is also related to preparation of income statement and the balance sheet. As per the AICPA committee of terminology accounting is regarded as a process of recording, classifying, summarizing and in systematic and significant manner. It is called an information system which helps in the identification, measuring, and communication of economic financial information which permits rationale and judgmental information among users. 1) Art of recording the business transactions: The systematic method of recording financial transactions in the books of accounts which helps in the fulfilment of the objective of the user and the accountant. 2) Systematic Process: Recording financial transactions is regular in nature and is done in methodical and chronological manners. Accounting is done through the application of various rules, regulations, principles and expertise. 3) Measurable in terms of money: The accounting transactions are measurable in terms of mon ey and need to be recorded in the books of accounts. These accounting events are measurable in terms of money. The events which are not measurable in terms of money are not recorded 4) Information Systems: It is information systems that measures the accounting process and communicates about the financial information through an economic entity. It also supplies financial information to the decision makers. 5) Medium: It is also regarded as an important medium for communicating the financial information and their interpretations. The main objective of the financial accounting would be to provide the necessary information to the user in a systematic process. There are various branches of accounting; cost, managerial and financial accounting procedures. It helps in ascertaining the results of the business transactions and also assessing the true financial position of the company. The major functions would be to identify and record the financial transaction of the organization which can be measurable in terms of money, grouping transactions that are similar in nature of a particular place which is done in ledger, summarizing the financial transactions which involve the preparation of income statement, trial balance and balance sheet and interpretation of financial statements by ascertaining the financial position of the company. Some of the major objectives of accounting would be to ascertain the results of a business organization within a particular time period ascertain the true financial position of a business organization and provide the necessary financial information to the users. The different types of users of accounting wo