It is one of the most important functions, as it grants access to better decision-making process. Financial accounting is a system of collecting, segregating, and analyzing financial information of the company. These financial statements are necessary to maintain the creditors, government, investors, bankers, shareholders and stakeholders reports. Accounting is mainly concerned with recording and forming financial statements of a firm. Today, accounting has attained a status of science for the firms and art for corporate experts. As there is growth in globalization of business, standards of financial accounting are changing.
Many international accounting firms have stated that accounting keeps a proper track of transaction related to flow of money in the organization. It includes transactions from incomes, assets, expenses, liabilities, and shareholders. This mainly results into PF account (profit and loss account) and cash flow statement.
These crucial financial statements help in attracting investors and providing timely information to the shareholders, stock exchanges, and security markets.
Financial accounting always includes information of transaction in terms of money. The information recorded is of specific time, which can be monthly or yearly. This helps in making comparison of company's current performance with previous years.
Financial accounting cannot be ignored, as every company operates for obtaining profits and having proper accounting function is the best way to determine the performance of the business. An efficient finance management system provides essential data for implementation of crucial decisions and bump off fundamental obstacles for better profit generation. Finance management is a vast subject consisting of topics such as Fund Flow, Cash Flow, Financial Capital, Currency Trading, Liquidity, Bankruptcy, Risk Management and Foreign direct investment.
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