The financial account of financial entities and institutions shows the amount of increase and decrease in assets owned by individuals or private companies or state government institutions. In addition, the financial performance of the entity shows the extent to which the financial performance of the entity is successful, Profit or loss in financial institutions, whether they are for profit or charity, using some financial statements that record all daily transactions, whether income or expense.
The concept of financial accounting
Financial Accounting A group of accounting operations that record all financial transactions occurring in an entity and are summarized in financial statements such as balance sheets, cash flow statements and statement of income over a specific period of time. Such as creditors, lenders and investors. All these accounting operations are conducted in accordance with a set of IFRS. Financial transactions occurring within the financial entity are in the group of day-to-day operations, The business needs of the establishment, which need to be recorded in the accounting records, by receiving reports of expenses from the employee, and invoices for the sale of goods to the client.
Fundamentals and rules of financial accounting
Financial accounting is one of the most important branches of accounting. It has a serious role in disclosing the financial position of the entity and its financial performance. Therefore, it uses a set of rules that assist in the preparation of financial reports properly, which we will explain in the following points.
- Financial accounting is concerned with disclosing the financial position of the company and its performance to parties outside the financial institution and those interested in it, such as investors and creditors, by preparing financial statements and closing accounts using financial accounting rules
- The financial statements are based on the determination of a specific period of time, during which the financial statements are prepared and the financial entity's performance is evaluated. It is realistic between the beginning and the end of this period of time,
- Financial accounting reports, such as the income statement and the balance sheet, are prepared according to a set of international rules, defined by the Financial Accounting Standards Board (FASB). These are basic principles of the accounting financial system, and the entity may not prepare such lists according to its own rules,
- Two methods are used to record the accounting procedures, namely the accrual method, which depends on the recording of transactions as they occur, even if the entity does not receive the revenue and the cash method for which transactions are to be recorded when exchanging cash.
What are property rights?
The residual value of the owner of an economic unit after disposal of total assets and total liabilities (liabilities)
Equity = Total Assets - Total Liabilities (Liabilities)
What are the methods of calculating depreciation?
1- Fixed installment method
2 - The method of double premium
3 - The method of sum of the numbers of years
4- By volume of production
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