Financial accounting is the main branch of accounting. Companies daily transactions are recorded, summarized and updated in financial reports. The income statement shows the profitability of the company. Balance sheet handles the difference between liabilities and assets. Cash flow statement manages the cash in and out and stock equity gives information about company invested in the stock.
2. Financial Accounting
● Accounting is the process that includes creating
records for a daily transaction of the company.
● Accounting has several branches and fields. Most
famous among them is a financial accounting. It
creates the report that gives clear information
about the financial health of the company.
3. Financial Accounting
◉ Financial accounting deals with the preparation
and presentation of reports called financial
statements. These statements present a company's
condition, results of operations, cash flows, and
other related information.
◉ Financial statements include a balance sheet, an
income statement, stockholders equity statement,
a statement of cash flows, and supplementary
notes.
4. “
Income Statement
The income statement shows company profitability
and growth during the specific time span. Income
statement includes revenue, expense, gain, and loss. It
has all information how much revenue earned and
expenses incurred.
5. “
Balance Sheet
The balance sheet is divided into assets, liabilities, and
stockholders' equity. Assets include cash, accounts
receivable, inventory, prepaid insurance, buildings,
and equipment.
6. “
Balance Sheet
Liabilities are obligations that must be paid back. It
includes notes payable, accounts payable, wages
payable, and interest payable. Stock equity is defined
as the difference between a number of assets and a
number of liabilities.
7. “
Cash Flow Statement
Cash flow statement has three parts: operating
activities, investing activities, and financing activities.
Operating activities explain how a company's cash
have changed due to daily give and take transactions.
8. “
Cash Flow Statement
Investing activities are amount spent or received in
transactions of long-term assets. The financing
activities include long-term debt, issuance of stock,
money spent on long-term liabilities.
9. “
Stockholders' Equity Statement
The statement of stockholders includes net income,
other comprehensive income, dividends, the
repurchase of common stock, and the exercise of stock
options that company has invested in.
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