Question

i) What is 'Financial Accounting'? Explain in brief the Scope of Financial Accounting.​

Answer 1

Answer:

Financial accounting is the field of accounting concerned with the summary, analysis and reporting of financial transactions related to a business.

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Answer 2

What is financial accounting ?

• Financial accounting is a particular type of accounting that includes a method of documenting, summarising, and reporting the transactions arising from business operations for a period of time.

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★ It reflects two types of accounting :

1. Accrual basis of accounting
2. Cash basis of accounting

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Scope of Financial Accounting

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1. Records Financial Transactions

→ Financial accounting record each and every financial transaction taking place in the business organisation.

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⠀⠀2. Classify And Summarize Information

→ Information collected and recorded by financial accounting is properly categorized according to their nature.

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⠀⠀3. Prepares Financial Statements

→ Financial accounting prepares financial statements like cash flow statement, income statement, balance sheet etc.

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⠀⠀4. Interprets Financial Information

→ Financial accounting interprets information from several analysis conducted and financial statements prepared.

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⠀⠀5. Communicates All Outcomes

→ Financial accounting serves the needs of all external stakeholders by delivering them true and accurate picture of the company’s financial affairs.

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