Definition of financial accounting
Financial accounting is defined in English Financial accountingThe financial accounting is based on a set of financial reports and records that determine the results of the institution within a certain period of time. The most important examples are the balance sheet, the statement of income and the tax returns. Financial means of measuring economic performance in terms of revenues and financial expenses, and it is considered the most important element in the management decisions of the institution.
Financial Accounting Principles
The accounting principles are generally considered to be the set of rules and guidelines that the company must follow when reporting financial statements. Companies must submit regular financial statements in accordance with accepted and accepted accounting principles. Accounting principles help to control the accounting world in accordance with general accounting principles and concepts. These accounting principles are financial accounting, and the following are the most important principles of financial accounting:
The principle of entitlement and recognition of revenue: It is called in English Revenue recognition principle. In accordance with this principle, revenue is recognized and recorded in the books and records of the accounting when it is realized, and the recognition of expenses when incurred, regardless of the payment of such expenses.
Cost principle: It is called in English Cost principle. This principle includes the amount expended in cash in the statement of accounting assets where the amount can not be adjusted.
Principle of preservation: It is called in English Conservatism principle, Which includes the detection and forecasting of losses and profits before they occur.
The principle of continuity: This principle includes the payment of all the financial obligations of the Corporation in order to achieve the commercial objectives and not to be bankrupt or liquidated and to ensure the continuity of the work of the institution.
The principle of full disclosure: This principle establishes all the financial information of the institution for a specific period of time and disclosure to certain official authorities.
The principle of conformity: It is called in English Matching Principle. This principle is concerned with the reconciliation of income received or receivable and expenses paid or accrued in accordance with accounting accruals.
Principle of accounting period: This principle establishes the business activities of the enterprise within a specified period of time in order to facilitate accounting operations.
The principle of monetary union: It is called in EnglishMonetary Unit Assumption, Which includes measuring the economic activity of organizations and institutions in US dollars.
What are GAAP?
These are the rules and regulations that were agreed upon at the time of registration, classification and preparation of financial reports (FASB)The most commonly accepted accounting principles are:
Principle of revenue matching expenses
Historical cost principle
Revenue recognition principle
Principle of caution
Principle of persistence
What are the types of financial transactions?
The financial operations carried out by the entity and recorded in the books are divided into the following sections:
These include the operations that occur as a result of the establishment of the company to carry out its main activity, the purpose of which is to make a profit, such as the purchase and sale of goods, expenses paid for salaries, wages, electricity and others.
These include operations that occur as a result of the purchase of fixed assets and the purpose of which is to assist the establishment in the exercise of its activity and not the purpose of the acquisition is to resell and profit from them, such as the purchase of land and buildings and production lines and the purchase of office furniture and computers, as well as operations that occur As a result of the disposal and disposal of these assets after the end of their useful life.
These include the operations that occur to finance the facility with cash and in-kind assets so that the enterprise can carry on its activities. This financing can be obtained either from internal sources from the owners of the facility, which is represented by capital, or to be obtained from external sources from others in the form of loans.
What are the types of accounts in accounting?
The relationship between them can be represented by the following equation, called the accounting equation or the budget equation:
Commitments + Capital - Personal Withdrawals + Revenues - Expenses
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