The Main Goal of Financial Accounting is Easy to Understand

Rancakmedia.com – For those of you who haven't yet and want to know about the main objectives of financial accounting, you can easily find out in the article we have provided below.

Accounting itself is a scientific discipline that deals with financial transactions. You will prepare information about transactions that occur within a certain time period to be distributed to those who need it.

Therefore, it is important for you to study accounting finance to maintain the financial situation of your business or company. Come on, see the full explanation below!

Understanding Financial Accounting

In general, financial Accounting handles the movement of money in and out of a particular company or organization. The report from this activity will help you prepare a budget for financial assessment.

Understanding Financial Accounting According to Experts

Some professionals also have their own definitions of financial accounting, including:

1. Kieso & Weygant (2000), a series of financial reports culminates in the preparation of a report on the organization's overall financial situation. Moreover, both internal and external consumers of financial reports depend on these numbers.
2. Sugiarto (2002): a scientific discipline in the world of accounting that focuses on making financial reports, especially for companies, which is done in stages. This report is also a means for management to hold itself accountable in front of shareholders.
3. Martani (2012): efforts directed at external reporting. As a result of the various external elements and their specific financial accounting objectives, report writers are forced to use a variety of concepts and assumptions to complete their work.

If a conclusion is drawn, then financial accounting is an activity or field related to the financial statements of a company.

Some types of information you need to collect are profit and loss statements, retained earnings, and balance sheets, as well as information about capital adjustments made by internal and external decision makers.

Financial Accounting Function

In practice, financial accounting has various functions, such as:

Calculating Profit and Loss

Having a strong understanding of the basics of accounting can help you analyze a company's income and expenses. The accuracy of these calculations is also expected of you in your role as an accountant.

You can use the information you get to help you make judgments, especially when it comes to estimating sales revenue for the next season.

As a report for management

As said, the purpose of financial accounting is what accountants do to ensure company management is accountable. Apart from that, you have to collaborate with other people.

Meanwhile, it will be used by internal parties for various management tasks, especially those involving assets, liabilities, capital and taxation.

Supervision and Monitoring

Then, financial accounting functions as a management tool to oversee many aspects of a business. especially in transactions that can result in big losses if you don't verify them carefully.

The ability of shareholders and other stakeholders to coordinate policies and decisions is considered successful in supervision and monitoring.

Facilitates Profit Sharing

Financial accounting reports will make it easier for companies to divide income. These rights are determined because they can take into account internal and external factors. Apart from this, organizations are also helped in identifying the overall management through these reports.

Helps Achieve Company Goals

The purpose of financial accounting is to assist companies in achieving their goals. This, of course, requires careful thought. Using their analytical and evaluative skills, accountants are also tasked with conveying financial transaction data throughout the business.

Main Objectives of Financial Accounting

Now that we have established what financial accounting is and what it does, let's talk about why it is important and the main objectives of financial accounting include the following:

Providing Financial Information

The ability to provide financial data about a company or business is the main goal of financial accounting knowledge.

These financial accounting objectives may serve as a guide when trying to calculate profit margins. Rapid growth can be concluded if the company is able to obtain large profits.

Providing Asset and Liability Information

A company's assets and liabilities are the subject of further financial accounting objectives. As a result, financial accounting can be relied upon as an economic tool that businesses of all sizes can rely on.

Of course, you have to do an in-depth study of capital, debt, receivables and assets to get the correct calculation results.

Presenting Change Information to Stakeholders

Furthermore, the purpose of financial accounting is to show shareholders or other stakeholders how their investments have changed over time.

Financial accounting data, such as information or dividends, can be used to track changes in economic cycles, a term known as net.

From here, stakeholders can estimate the extent to which the company can increase revenue.

Financial Tools Companies Use

Financial accounting is a technique that can be used by reputable and experienced organizations in their financial records.

To make a clear report, those of you who understand it will have an advantage. That way, companies can fix difficulties and protect their companies from collapse.

Maintaining Company Financial Stability

Maintaining a stable financial situation is, without a doubt, the ultimate financial accounting goal of financial accounting.

Accurate reports and frequent reviews will allow you to identify errors or omissions quickly, so you can correct them as soon as possible.

In addition, companies will not be confused in formulating plans and recommendations for the stakeholders they target.

Financial Accounting Assignments

As said before, many financial accounting responsibilities are still related to those mentioned. The current financial state of the organization will be revealed through the data you collect and analyze.

Contributions from related parties, both internal and international, will also help this responsibility to be carried out properly.

To carry out three financial responsibilities accurately, correctly and clearly, you must ensure that the report meets financial accounting standards called Statements of Financial Accounting Standards, or PSAK.

There are four versions of PSAK that you can use according to your interests, including Government Accounting Standards, Financial Accounting Standards for Entities Without Public Accountants, PSAK-Sharia, and Financial Accounting Standards for Micro, Small and Medium Entities (SAK-EMKM).

Types of Financial Accounting Reports

The various reports that you make from financial accounting, namely:

1. Cash flow statements Cash receipts and payments made by a company during a certain time period are reported in several types of reports.
2. Profit and loss report, a type of report that contains details of the company's profit and loss over a certain period of time;
3. Equity report, a type of report that provides information related to owner's equity and capital in the company over a certain period of time.
4. Financial balance sheet, a statement of financial position, a type of report that provides information about a company's equity, assets, or other liabilities.
5. Notes to financial statements Type of reporting of physical or financial information. Notes to financial statements are used in financial accounting to provide information about a company's accounting rules.

That's a complete explanation about financial Accounting, starting from the meaning, function and purpose of aaku to the tasks carried out. Hopefully this post can contribute to your awareness of this topic and help you practice it according to the guidelines.

FAQs

Well, below we have also provided information that is still related to questions and answers about financial accounting, see below:

What Does Financial Accounting Cover?

To produce financial reports, it records financial transactions. Financial reports that contain the company's balance sheet, how to calculate profit and loss, reports on changes in capital, and retained earnings reports for a certain period.

What is meant by accounting?

Accounting is explained by Hantono and Rahmi in their book Introduction to Accounting as a process that accurately documents and categorizes financial transactions and other events related to company finances, as well as summarizing, reporting and evaluating these findings.

Explain what is meant by finance?

“Finance” is the word for everything related to the management, development, and study of money and investment. Finance can be broken down into three main areas: finance for government, finance for business, and personal finance.

Conclusion

Accounting itself is a scientific discipline that deals with financial transactions. It is very important for you to learn financial accounting to maintain the financial situation of your business or company. The report from this activity will help you prepare a budget for financial assessment.

Financial accounting will be used by external parties for various management tasks, especially those involving assets, liabilities, capital and taxation.

That is the information about the main objectives of financial accounting, hopefully the article above can be useful and helpful for all of you.