Financial accounting It is a process involving the preparation, reporting, and interpretation of accounting information that management of the economic unit provides to users, primarily communicating it to external users of the information.
Financial accounting is the part of the accounting system that deals with measuring and reporting the financial position and the business's results over a given period, in accordance with generally accepted accounting principles. It provides information about the economic unit's relationships with external individuals or entities, such as suppliers, creditors, investors, the government, etc., but not to those involved in preparing the reports or who have access to the details. Their ability to understand and have confidence in the reports depends directly on the standardization of the principles and practices they use to prepare these reports.
Without such standardization of principles and practices, reports from different companies would be difficult to understand and even harder to compare. As a result, we have a series of well-organized processes to maintain the consistency and structure of financial reports. This has been achieved through international accounting standards, specifically the Kosovo Accounting Standards.
Financial accounting encompasses a significant portion of all accounting functions and represents a set composed of:
- bookkeeping,
- accounting planning,
- accounting oversight and
- accounting analysis of assets, liabilities, and equity, and of the enterprise's financial results, respectively.
Financial accounting provides data in the form of complex information expressed in financial statements. They are:
- Balance sheet
- Income Statement
- Cash Flow Statement
- Statement of Changes in Equity
- Financial analyses through liquidity reports, profitability reports, market reports, asset management reports, accounts receivable statements, etc.
Source Wikipedia.