Financial Accounting Assignment Help
Task 1 Accounting purpose: Write a brief paragraph describing and explaining the purpose of accounting
Introduction to Financial Accounting
The basic purpose of accounting includes the activities like data collection as well as recording, monitoring of the data, business control and management.Thus, the purpose of accounting centers on the collection and subsequent reporting of financial information. These all activities are done with the end objective of sound economic decision making within the scope of an organization.
Purpose of Financial Accounting
One of the major tasks which are done by the financial accounting is preparing financial reports which help in providing information regarding the performance of a company to the internal as well as external stakeholders of the company which include investors, creditors and tax authorities. In the accounting process, post the gathering of financial information in the pre specified accounting records, the same are compiled into various financial statements. The financial statements include the following documents (Hanson,1973):
- Balance sheet
- Disclosures that accompany the financial statements
- Income statement
- Statement of cash flows
- Statement of retained earnings
The purpose of accounting practices also includes the task of ensuring that the statements of financesare prepared and recorded under certain sets of rules which are termed as accounting frameworks. The most widely used accounting frameworks are International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). In view of the fact that the accounting results and records which are presented in the financial statements can be somewhat different on the basis of the framework that has been used for preparation of the same, it is important that the accounting team of the firm decides and makes use of the framework which suits the requirement of the recipient of the financial statements. It is also the purpose the accounting activities to develop and prepare supplementaryfinancial reports for specific purposes, such as determining the profit on sale of a product, or the revenues generated from a particular sales region. These are usually considered to be managerial reports, rather than the financial reports issued to outsiders(Hanson, 1973).