Question

Define financial accounting and explain its scope in detail

Answer 1

Financial Accounting is the art of recording ,classifying and summarising in a significant manner in terms of money transactions and events which are in part ,at least of a financial character and interpreting the results thereof.

This is the definition of Financial Accounting given by the American Institute of Certified Public Accountants.

Scope of Financial Accounting :

1) Making decisions concerning the use of limited resources including identification if crucial decision areas and determination of objectives and goals.

2) Effectively directing and controlling the organization's human and materials resources

3) Maintaining systematic records and reporting on the custodianship of resources.

4) Facilitating special functions and control